Is There a Penalty For Hiding Assets In a Divorce?

What is the penalty for hiding assets in a divorce?

In the UK, hiding assets during a divorce is considered a serious matter.

If a party is found to have deliberately concealed assets or provided false information about their financial situation during divorce proceedings, they can face significant penalties. One penalty could be an order from the court to pay the other party’s legal costs, which can be significant.

If either party tries to hide the existence of their assets, this will be considered contempt of court and can lead to fines or even imprisonment as it’s a criminal offence.

The court has the power to revisit and alter financial orders if it is later discovered that one party failed to disclose assets or lied about their financial situation.

This could result in a less favourable outcome for the party who hid the assets.

What can I do if my spouse is hiding assets during divorce?

If you suspect that your husband is hiding assets during your divorce in the UK, it’s important to take action to ensure a fair and just financial settlement.

Here are the steps you can take:

1. Legal Representation: Engage a family law solicitor who can advise you on how to proceed and what actions can be taken to uncover hidden assets.
2. Forensic Accountant: Your solicitor may recommend hiring a forensic accountant. These professionals are skilled in examining financial records and can help uncover discrepancies, hidden assets, or unreported income.
3. Court Orders: If you believe your husband is not forthcoming about his financial situation, your solicitor can apply for various court orders.

Court orders your solicitor can help you apply for include:

• A freezing injunction to prevent your husband from disposing of assets
• A search order to allow for the search of property and seizure of relevant documents.
• A disclosure order against third parties (e.g., banks or companies) to release financial information about your husband.

Remember, both parties have a duty to the court to provide complete and honest disclosure of their financial circumstances.

Concealing assets or providing false information is illegal and can have serious legal consequences.

Why do some spouses try to hide assets in a divorce?

Both joint and individual assets are on the table when it comes to working out a financial settlement during divorce negotiations.

If there is a significant disparity in wealth or income, the spouse in a stronger financial position will sometimes feel it is unfair to share their assets when the relationship comes to an end.

In this scenario, they might decide to hide money or dispose of other assets shortly before the divorce procedure, potentially to prevent what they believe is rightfully theirs from being added to the matrimonial pot when dividing assets in a divorce.

Is it illegal to hide assets in a divorce?

It is illegal to intentionally hide assets from the court during a divorce. There is a duty on each spouse to make a full and frank disclosure of their financial position, which includes the full extent of their assets.

If either divorcing party deliberately fails to divulge the existence of assets during the divorce procedure, this can potentially be considered contempt of court, leading to fines and even imprisonment.

Which assets do spouses typically try to hide?

There is a wide range of assets that spouses may try and hide during a divorce, including:

• Savings – occasionally there will be a separate individual savings account that is kept secret from the other spouse.
• Shares – if one spouse owns shares in their own name, they will sometimes transfer shares to a family member to try and avoid the value of these from being added to the matrimonial pot.
• High-value items – expensive jewellery, antiques or gold might be purchased to reduce accessible cash. Occasionally a spouse may claim to be holding these for a third party.
• Business assets – if one spouse owns a business, such as a limited company, the majority of their wealth may lie in their company. Sometimes they will try and hide these business assets or undervalue the business when filling out the divorce papers. How are business assets divided in a divorce?
• Bonuses – the majority of the payment in some jobs comes in the form of significant annual bonuses. Some spouses may try and defer bonus payments in an effort to reduce their assets for purposes of divorce. They will then collect these bonuses after the decree absolute has been issued.
• Cryptocurrency – increasingly wealth is being hidden in cryptocurrencies such as Bitcoin. The nature of cryptocurrency means that it can be impossible even for a court to gain access to it.

Are Personal Savings Classed as Assets in Divorce?

All personal savings must be disclosed if negotiating a financial settlement when you divorce. These personal savings will usually have been built up within the marriage classing them as a matrimonial asset, even when held in one name only.

For more details about when your spouse may be entitled to half of your personal savings you may want to read: Are Personal Savings Classed as Assets in Divorce?

What are some common red flags of fraud or hidden assets?

The things to look out for in terms of hidden assets during divorce include:

• Transfer of assets – if money, shares, or other assets are transferred by a spouse to their family members shortly before divorce, this might indicate they are trying to avoid them from being added to the matrimonial pot.
• Online accounts – if the login details to any shared internet accounts are changed, such as a new banking password, this can be a sign that they are making significant withdrawals that they want to keep secret.
• Post – if regular mail from personal or business bank accounts stops arriving, this can be a red flag.
• Spending habits – if there is unusual spending activity, this may indicate that money is being transferred to keep it out of the financial settlement.
• Delays – sometimes one spouse might try and put off divorce proceedings, with a view to allowing themselves enough time to dispose of certain assets.

Implications of hiding assets in a divorce settlement

Other than the potential criminal penalties of deliberate failure to disclose assets, a family court has the power to issue civil penalties.

For example, it can reduce the share of the matrimonial pot available to the dishonest spouse.

Financial Consent Order Services

We recommend that every couple who gets a divorce through our services also obtains a financial order so that both parties can have a financial clean break and move on knowing that no future claims can be made against each other.

Without obtaining a financial consent order you will still be financially tied to your ex-spouse after your divorce.

View our online consent order services from £399 – Saving you thousands in legal fees.