Panama Papers: a spotlight to overturn divorce settlements.
A new wave of divorce cases could be launched in London and around the country if the ‘Panama Papers’ show that wealthy parties hid their assets from their ex and the court.
According to media reports, the leaked files from Panamanian firm, Mossack Fonseca, show how some parties stored assets in complicated trust funds held by offshore companies.
I believe that there will be a lot of ex-spouses who will be interested to see if the leak of 11 million documents could lead to their case being re-opened if the assets were not originally disclosed.
The High Court is quite used to looking at complex trust structures in divorce cases. Inevitably, however, a trust can be used to as a vehicle to reduce the ex-spouse’s financial claims.
There is a real problem in divorce cases in getting to the bottom of what a case is worth; and the publicity that the Panama debacle brings is only to be welcomed.
For example, the documents reportedly show that the British tycoon, Scot Young, helped keep the detail of a £500 million fortune hidden from his ex-wife.
In England there a duty on both parties in a divorce to make a ‘full and frank’ disclosure.
In short: if a party does not disclose fully and properly then there is a risk that the financial settlement or court order will be set aside. However, many parties are still tempted not to disclose and to keep assets hidden.
This revelation also comes very quickly on the back of two Supreme Court decisions which ruled in favour of two ex-wives, Alison Sharland and Varsha Gohil and which upheld the principle that dishonesty would not be tolerated in the family law courts. I blogged about this previously here.
A spotlight has now been created on how wealthy spouses hide their assets and it could make this type of dishonesty more likely to be investigated by the courts in the future.
As the leak of the ‘Panama Papers’ show there is always a risk of being ‘caught’ later. Without a doubt there are likely to be repercussions if UK residents or a party to English divorce proceedings fail to disclose assets in offshore firms or trusts. This is not an easy process and needs specialist family law advice.