Acrimonious splits bring out the worst in people. With emotions running high, it’s not unusual for individuals going through a divorce to feel aggrieved about the idea of sharing anything. Financial settlement is one of the most contentious areas of divorce, along with child custody.
When a marriage or civil partnership breaks down, both sides can feel they have a genuine right to money and assets. But, selling assets, transferring assets or hiding them to stop your estranged partner getting their hands on them, amounts to fraud.
When filing for a divorce, there are laws and procedures in place to protect against fraudulent activity. The law in England and Wales provides that when a couple divorce, the financial settlement between them should be reasonable and fair.
Even if you agree on a financial settlement, it’s still a good idea to make your agreement legally binding with a consent order, in case things turn nasty later on. If you divorce without a consent order, your ex-spouse may be entitled to make a financial claim at some point in the future.
You don’t need to use a solicitor or another professional when you separate to sort out your finances. However, it’s a good idea to get advice on your rights, responsibilities and entitlements. You may opt to use a solicitor, or collaborative family lawyer, as well as an accountant to help value assets. You may also wish to seek advice from the Pensions Advisory Service.
Financial disclosure
The first step in reaching a fair settlement is through financial disclosure. Both parties must openly share full details of their financial circumstances. Many people appoint a divorce solicitor to help with this.
If you suspect your ex-partner is hiding something, your divorce solicitor may be able to investigate further. However, this is not usually their area of expertise. If you suspect non-disclosure or fraud you may want to seek the services of a forensic accountant, such as London based specialists Wellden Turnbull.
Documents you will need for financial disclosure are:
- A recent valuation of any property that you own
- Recent mortgage statements of mortgaged properties that you own
- Bank statements for all accounts that you’re named on
- Valuations for savings accounts, stocks and shares
- Business accounts if you’re self-employed
- Valuations of any pensions you have
- Your wage slips and latest P60, if you’re on the payroll
Court action
When negotiations aren’t going to plan, and your ex is refusing to discuss financial affairs with you, you may want to consider applying to court. If you have a divorce solicitor, they will try to resolve the dispute with your ex-partner’s solicitor. But, if that isn’t possible, you or your divorce solicitor can apply for a court order, instructing your ex-partner to reveal the true extent of his or her assets. Failure to comply with a court order could result in a Penal Notice being served, and your ex-partner could even end up in prison.
To apply for a court order you will need to complete a fairly simple form (Form A) and pay a court fee. The court will set a timetable and you will need to submit a full financial statement, (known as Form E). This is a lengthy and comprehensive statement of your financial situation, and will need to be sworn in front of a solicitor who isn’t involved in your case.
In court, if a judge reviews a divorce financial settlement, and considers the agreement to be unfair, it will be rejected by the court. Going to court may be the only way you can prevent your ex-partner from selling, transferring or getting rid of assets. The downside of going to court is in the expense. Legal fees can easily mount up to £10,000 or more. Financial settlement in divorce can be incredibly complex, especially when the separation is acrimonious.
What types of assets are commonly hidden?
Assets can be concealed in many ways. Most commonly they are given to a family member or a friend for safekeeping. Some will try to have bonuses or pay rises postponed at work. If a spouse owns a business, there are also lots of ways to hide assets within the business. The most common types of assets to be hidden during divorce are:
- Cash
- Bonds
- Mutual funds
- Insurance Policies
- Stock and annuities
How to protect your finances during divorce
- Hire a forensic accounting
Put simply, a divorce is the ending of a contract between two parties. But, in most partnerships, one person has more control over money and assets than the other. This leaves one person at a disadvantage.
The person with the financial knowledge may use this to secure a favourable settlement. For example, a higher earning spouse may attempt to understate income to reduce maintenance payments for children.
Certain forensic accountants are specialists in matrimonial disputes, and they will be able to help uncover assets and provide an expert testimony in court.
- Protect the rights to your home
If the family home is owned in your ex-partner’s name, you can register your interest to make sure it can’t be sold or remortgaged without your knowledge. For more information on your rights to protect your home see the Money Advice Service’s help page here.
- Contact your mortgage adviser
If your name is on the mortgage, you may want to contact your mortgage adviser to explain what has happened and discuss how you will manage the repayments.
- Contact your landlord if you are renting your property
Let your landlord know what is happening. If both of your names are on the tenancy agreement, and you are the one staying in the property you may be able to continue the let in your name only. If you have left the property, you need to get the tenancy transferred into your ex-partners name.
- Contact your bank, credit card and loan companies
Stop any of your wages going into a joint account. Contact any financial institutions where you have joint accounts and let them know what is going on. This is especially important if the split is acrimonious.
Always remember this is a complex area of law. You will need the help of a divorce solicitor and in some cases a forensic accountant. Always attempt to resolve your dispute through mediation first, as this is a much more cost-effective solution.
