Financial Disclosure Divorce: Why It Matters & How to Do It Right

Divorce can be a difficult and emotional process, and one of the biggest challenges is dividing up assets and liabilities between the two parties.

In England and Wales, there is a legal requirement for both parties to provide full and frank financial disclosure during the divorce process.

This means that each party must provide a comprehensive list of all their assets, liabilities, income, and expenses.

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    What is Financial Disclosure In Divorce?

    Financial disclosure in divorce is the process where both parties exchange full details of their finances, including personal assets, liabilities, and future needs.

    Divorce financial disclosure involves the completion of documents that clarify your financial position, ensuring that each party discloses their individual finances fully and honestly.

    It is most common to go through financial disclosure as part of a divorce, and it’s a legal requirement that obliges both parties to provide transparent information. Even if you are negotiating without the court, you and your ex-partner need to fill in a financial statement to ensure fairness.

    Exchanging a financial statement, known as Form E ensures parties can reach a fair financial settlement. Other supporting documents may be included as proof of valuations.

    Why is Full Disclosure Crucial in Divorce Proceedings?

    Full disclosure is vital in divorce proceedings because it ensures that both parties have a complete and transparent understanding of each other’s financial situation.

    One party may unknowingly agree to an unfair financial agreement, missing out on assets or income they are entitled to if the full value of assets isn’t shared honestly and accurately.

    By sharing accurate information on income, assets, debts, and future financial needs, both parties can negotiate from a position of fairness, ensuring a reasonable division of property, child support, or spousal maintenance.

    Here are the 4 main benefits of receiving full and frank disclosure:

    1) To ensure a fair and equitable division of assets

    When you get divorced, your assets and liabilities will be divided between you and your ex-spouse.

    This can include everything from property and investments to bank accounts and pensions.

    In order to ensure a fair and equitable division of assets, it’s important that both parties provide a comprehensive list of all their assets and liabilities.

    This allows the court to make an informed decision about how to divide the assets.

    2) To prevent one party from hiding assets or income

    Unfortunately, some people may try to hide assets or income from their ex-spouse during the divorce process. This is known as non-disclosure.

    This can be done by transferring assets to friends or family members, or by failing to disclose all their income.

    By requiring full and frank financial disclosure, the court can prevent one party from hiding assets or income, and ensure that all assets are included in the division of assets.

    As part of the divorce disclosure process, both parties must sign a Statement of Truth. This statement of truth affirms that the information provided is accurate and complete to the best of their knowledge.

    3) To ensure a Consent Order reflects the financial arrangements accurately

    A Consent Order is a legal document that sets out the financial arrangements between you and your ex-spouse after your divorce.

    It’s important that the Consent Order accurately reflects your financial arrangements, as it is a binding legal document.

    In order to ensure that the financial order is accurate, it’s essential that both parties provide full and accurate financial disclosure.

    4) To avoid future disputes

    Finally, full and accurate financial disclosure can help to prevent future disputes between the parties.

    By providing a comprehensive list of all assets and liabilities, both parties can be confident that the division of assets is fair and equitable.

    This can help to avoid disputes in the future and can ensure that both parties can move on with their lives.

    Is financial disclosure required for divorce? In England and Wales, financial disclosure is required by law during divorce proceedings.

    It’s important to work with a family law solicitor to ensure that you provide full and accurate financial disclosure, and to ensure that the division of assets is fair and equitable.

    This can help to prevent future disputes and can ensure that both parties can move on with their lives after the divorce.

    If you have any questions or concerns about financial disclosure or the divorce process, don’t hesitate to contact a family law solicitor for guidance and support

    What details are included in Financial Disclosure?

    Here is a breakdown of the most important details to include in financial disclosure:

    Category Details
    Assets and liabilities Provide details of all assets and debts, including savings, investments, pensions, loans, and mortgages
    Income Disclose all income sources, such as wages, self-employment, and rental income
    Future needs Provide a forecasted budget for living costs, childcare, and housing to outline future financial needs
    Property List owned or rented properties with mortgage details, valuations, and any rental income
    Personal belongings Declare personal items worth over £500, such as cars or jewellery, with valuation proof
    Pensions Submit details of private and state pensions, including current values and future benefits
    Business interests Disclose business ownership, assets, liabilities, and income from business interests

    What is the purpose of Financial Disclosure?

    The purpose of financial disclosure is to ensure a fair and equitable division of assets and to prevent one party from hiding assets or income from the other.

    Irrespective of your financial circumstances, it’s vitally important that you address it as part of your divorce as the Final Order does not end your ties – it merely ends the marriage contract.

    If you have limited assets to separate, you may be able to obtain a clean break order. For longer marriages, this may not be possible and financial disclosure becomes even more important.

    Financial disclosure is required by law, and non-disclosure or providing false information in the disclosure process can have serious legal consequences.

    The court can set aside any agreement or order that is made if it is later discovered that one party failed to provide full disclosure of all their assets or income.

    In extreme cases, a party can even be held in contempt of court, which can result in fines, imprisonment, or both.

    What Financial Information Do I Need To Disclose?

    The financial statement form you need to complete is known as Form E; it’s a long and often complex document.

    Accurately determining the values of assets is a fundamental part of the financial disclosure divorce process.

    Whether it’s property, investments, or business accounts, understanding their true worth ensures that both parties receive a fair share.

    For high-value assets, such as property or businesses, expert valuations may be required to establish these values accurately.

    Here is a table outlining the most important documents you’ll need to gather to accurately complete Form E:

    Items in Form E Documents Required
    Income Recent payslips, P60, tax returns, and any dividend statements.
    Property Property deeds, recent mortgage statements, property valuation (within 6 months).
    Savings & Bank Accounts 12 months of bank statements, details of joint and individual accounts.
    Investments Statements for stocks, ISAs, bonds, and other investments.
    Pensions  Latest pension statements showing the cash equivalent transfer value (CETV).
    Debts Loan agreements, credit card statements, details of outstanding debts.
    Business Interests Business accounts for the last two years, formal valuation of business interests.
    Personal Belongings Valuations for items worth over £500, such as cars, jewellery, or artwork.

    What to do if your husband or wife refuses the financial disclosure process?

    Refusing to provide financial disclosure during a divorce is a serious mistake. Full disclosure is a legal requirement, and hiding assets or refusing to cooperate can lead to significant consequences.

    The court has several tools to ensure compliance when a spouse refuses to provide full disclosure. These actions aim to maintain fairness during the divorce process. Here are some key consequences of refusing to engage in the financial disclosure process:

    • Court Orders: Courts can proceed by making financial decisions based on assumptions about your husband’s assets. When financial details are missing, the court may estimate higher asset values, leading to a less favourable outcome for him.
    • Cost Orders: Courts may impose a cost order, forcing your husband to cover your legal fees due to his refusal to cooperate. This serves as both a penalty for non-compliance and compensation for the extra expenses you’ve incurred.
    • Contempt of Court: Non-compliance with a court order for financial disclosure can result in a contempt of court ruling. This leads to serious penalties such as fines or imprisonment, especially when the refusal is deemed intentional.
    • Fraud: Deliberate attempts to hide assets or provide false information can result in fraud charges. Fraud during financial disclosure carries heavy consequences, including fines or imprisonment, as it is seen as a direct effort to deceive the court.
    • Order Set Aside: When non-disclosure is discovered after a financial settlement, the court has the authority to set aside the order. This decision forces the settlement process to restart, leading to further delays and additional legal costs for both parties.

    Additional legal mechanisms and court orders include forensic accounts and freezing orders.

    Forensic Accounting – Engaging a forensic accountant may be necessary if there’s suspicion that your husband is hiding assets. A forensic accountant can carefully review financial documents and track any hidden or transferred assets, uncovering discrepancies that point to non-disclosure.

    Freezing Orders – If there are signs that your husband is trying to move or hide assets—such as transferring funds or selling property—you can request a freezing order. This legal measure prevents him from making financial moves while the disclosure process is underway, ensuring that assets remain secure until a fair settlement is reached.

    Frequently Asked Questions

    How far back does a financial disclosure go?

    Financial disclosure typically covers the past 12 months in terms of bank statements, income, and asset values.

    However, the court may ask for more historical data, depending on the complexity of your finances or if there’s suspicion that assets have been hidden.

    If, for example, one party sold property or transferred funds years before filing for divorce, the court could investigate those transactions to ensure fairness.

    Although the primary focus is on current financial status, past transactions can be reviewed if they seem relevant to your overall financial position during the divorce.

    Always provide full and honest details for transparency and to avoid legal complications.

    Who suffers most financially in divorce?

    Divorce can affect both parties financially, but studies show that women often face a more significant economic impact due to lower earning potential, career gaps (often for childcare), or reliance on a spouse’s income.

    Meanwhile, men may experience immediate financial strain due to child support or spousal maintenance payments but typically recover faster in the long run.

    Children can also increase the financial burden, with one parent (usually the primary caregiver) bearing higher living costs.

    Ultimately, financial suffering varies depending on factors like income, asset division, and spousal agreements.

    Do I need a solicitor to complete Form E?

    You don’t legally need a solicitor to complete Form E, but getting professional help can be valuable.

    Form E is a detailed form, covering everything from income and assets to debts and pensions, and mistakes could lead to delays or disputes later.

    While you and your ex-partner can fill it out yourselves, a solicitor ensures all sections are completed accurately, and nothing is missed, especially in complex cases involving business assets or pensions.

    If you opt to do it yourself, take time to understand each section and gather all relevant documents.

    However, if you’re unsure or there’s any potential disagreement, a solicitor can help avoid costly mistakes and ensure full financial transparency.

    Is my inheritance included in the divorce settlement?

    An inheritance isn’t automatically excluded from a divorce and can be included in a divorce settlement, but whether it’s shared depends on several factors.

    If the inheritance was received before the marriage, it’s often considered separate property. However, if it was used during the marriage (e.g., for joint investments, a home, or family expenses), the court may consider it part of the marital assets.

    Even if received after separation, it may be factored into the financial settlement if it impacts your overall financial standing.

    Courts aim to achieve fairness, so whether an inheritance is shared depends on its role in the marriage.

    Are there any consequences of incomplete disclosure?

    Failing to provide full and accurate financial disclosure in divorce proceedings can have serious consequences.

    If the court finds that one party has withheld information or misrepresented their financial position, the following consequences are possible:

    • Legal Penalties – The court may issue fines or hold the party in contempt, which could lead to imprisonment in extreme cases.
    • Settlement Set-Aside – Any financial agreement reached may be reopened, and the court could order a new settlement.
    • Costs Orders – The non-disclosing party may be required to pay the legal costs of the other party.

    How Does Mediation Affect Financial Disclosure in Divorce?

    Mediation provides a collaborative and less adversarial environment for resolving financial matters in divorce.

    During mediation, both parties are still required to provide full financial disclosure, but it often takes place in a more cooperative atmosphere compared to court.

    The mediator facilitates the process, ensuring each party fully discloses their finances.

    Unlike formal court proceedings, mediation allows for open discussions, making it easier to reach an amicable agreement that works for both parties.

    Additionally, mediation can help reduce legal costs and emotional strain, speeding up the resolution of financial disputes.

    Do You Need a Solicitor For Your Financial Agreement?

    Family law solicitors play a key role in ensuring that the financial disclosure is complete and accurate, providing reassurance and confidence to their clients.

    They help gather and verify necessary documents, facilitating a smoother and more transparent divorce settlement process.

    The court takes into account many factors when deciding on financial orders. A court can only make a judgement once they have the full picture of both parties’ financial positions.

    Seeking legal advice from experienced family solicitors is crucial throughout the divorce process, especially when navigating the complexities of financial disclosure.

    Whether you are dissolving a marriage or a civil partnership, a thorough understanding of financial disclosure can significantly impact the outcome of your case.

    Solicitors can provide guidance on the legal requirements, the court process and help clients gather the necessary documents, and negotiate on their behalf to reach a fair settlement.

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    Mark Keenan - CEO of Divorce-Online

    This post was written by Mark Keenan. Managing Director of Online Legal Services Ltd. Mark has been writing about divorce and related subjects for over 20+ years and is an expert in legal marketing.

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