The Importance of Financial Disclosure in Divorce: What You Need to Know

In 2022, there were 80,057 divorces granted in England and Wales, according to the Office for National Statistics (ONS). Each of these cases potentially involved complex financial settlements, highlighting the critical importance of financial transparency during divorce proceedings.

At the heart of this process lies financial disclosure, a legal requirement that ensures both parties have a clear and honest picture of each other’s financial situation.

Why is Financial Disclosure Important?

Financial disclosure is not optional; it is a legal obligation. The court requires full and frank disclosure to make informed decisions about financial settlements.

With complete disclosure, it is possible to achieve a fair division of assets. As noted by Miles and Hitchings (2018) in their study of financial remedy outcomes, “full and frank disclosure is essential to the court’s ability to achieve fairness between parties.”

Both parties need a clear understanding of the financial landscape to make informed decisions about their future. Thorough disclosure can also prevent future legal battles by ensuring all assets are accounted for at the time of divorce.

Four Consequences of Non-Disclosure

Failing to provide full and frank financial disclosure can have serious consequences:

1. Legal penalties: The court can impose sanctions, including fines or even imprisonment in extreme cases.
2. Reopening of settlements: If non-disclosure is discovered after a settlement has been reached, the case can be reopened, and previous orders set aside.
3. Costs orders: The court may order the non-disclosing party to pay the other party’s legal costs.
4. Adverse inferences: The court may draw negative conclusions about the non-disclosing party’s legal costs.

A study by Hitchings et al. (2013) found that disclosure issues were a common cause of dispute in financial remedy cases, highlighting the importance of getting this process right.

The Five-Stage Process of Financial Disclosure

At Maguire Family Law, we guide our clients through every step of the financial disclosure process:

1. Information gathering: We help you collect all necessary financial documents including bank statements, payslips, property valuations, and pension statements.
2. Form E completion: Our experienced solicitors assist you in filling out Form E accurately and comprehensively.
3. Exchanging information: We manage the exchange of financial information with your spouse or their legal representatives.
4. Disclosure review: Our team meticulously reviews the financial disclosure provided by your spouse, identifying any areas that require clarification or further investigation.
5. Questionnaires and further disclosure: If necessary, we prepare questionnaires to obtain additional information or clarification from your spouse.

Common Challenges in Financial Disclosure

While the concept of financial disclosure is straightforward, the process can be complex, especially in cases involving any of the following:

• High-net-worth individuals
• Business assets
• International assets
• Complex pension arrangements
• Trust structures

We have extensive expertise in dealing with complex financial situations and can provide the expert guidance needed to ensure full and accurate disclosure.

The Role of Voluntary Disclosure

While financial disclosure is a legal requirement in court proceedings, it is also crucial in out-of-court settlements. Research by Barlow et al. (2017) found that couples who engaged in voluntary financial disclosure were more likely to reach amicable agreements and avoid costly litigation.

At Maguire Family Law, we encourage and facilitate voluntary disclosure wherever possible, as part of our commitment to constructive and cost-effective dispute resolution.

Protecting Your Interests During Financial Disclosure

While full disclosure is mandatory, it is important to approach the process strategically:

• Timing: The timing of disclosure can be vital, especially if there are concerns about the dissipation of assets.
• Presentation: How information is presented can impact negotiations. We ensure your financial position is presented clearly and accurately.
• Valuation: Obtaining accurate valuations of assets, especially for businesses or property, is crucial.
• Pensions: Pension assets are often overlooked or undervalued. We ensure these are properly accounted for.
• Hidden assets: If you suspect your spouse may be hiding assets, we can advise on steps to uncover these, including the use of forensic accountants if necessary.

How Maguire Family Law Can Help

At Maguire Family Law, we understand that financial disclosure can be a daunting process. Our team of expert financial and divorce solicitors is here to guide you through every step, ensuring that your disclosure is complete and accurate. We combine our legal expertise with a compassionate approach, recognising the emotional challenges that often accompany financial discussions during divorce.

If you are going through a divorce and have concerns about financial disclosure, contact us today for expert advice and legal support.

Sources

Barlow, A., Hunter, R., Smithson, J., & Ewing, J. (2017). Mapping paths to family justice: Resolving family disputes in neoliberal times. Palgrave Macmillan. (2018). Financial remedy outcomes on divorce in England and Wales: Not a ‘meal ticket for life’. Australian Journal of Family Law, 31(1), 43-80.

Office for National Statistics. (2023). Divorce statistics. https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/divorce.

Hitchings, E., Miles, J., & Woodward, H. (2013). Assembling the jigsaw puzzle: Understanding financial settlement on divorce. University of Bristol.

Miles, J., & Hitchings, E. (2018). Financial remedy outcomes on divorce in England and Wales: Not a ‘meal ticket for life’. Australian Journal of Family Law, 31(1), 43-80.