What is Financial Disclosure in Divorce?

Introduction to divorce financial disclosure

A divorce ends your marriage but it doesn’t end your financial ties to your former spouse.

During the divorce process it is hugely important to also engage in the process of resolving your financial arrangements. Important points to consider are where you will each live, if you have children, who they are going to live with and where, what you will live on and how you will share any assets. This includes any property, savings, investments, shares, business assets, personal belongings and pensions that you each own and deciding whether there should be ongoing maintenance payments.

Even if you do not intend to go to Court or instruct solicitors to help from start to finish, it is important to understand what a Court might order in your circumstances, to consider what would be fair. Taking legal advice early on in the process will help you get a sense of where you stand, what to prioritise and your next steps.

What is the purpose of financial disclosure in divorce?

After taking legal advice, financial disclosure is the first step. This is a process where you both provide information to the other regarding your income, assets and debts. The purpose of financial disclosure is to ensure that you both have a clear understanding of each other’s finances so you can negotiate a fair agreement on how to divide your assets and address any ongoing financial responsibilities.

If you both agree to engage in a “non-court” dispute resolution process such as mediation, arbitration or a private hearing, financial disclosure is required. Most couples therefore exchange disclosure on a voluntary basis, but a court can make orders for financial disclosure if necessary.

Even if you come to an agreement yourselves, the Court will, in the very least, need a summary of the financial position when determining whether the agreement is fair.

How do you make your disclosure?

You both complete a Form E, a lengthy document that contains information about your financial status. Form E guides you to disclose:

• Property values
• Mortgage balances
• Each bank account you have and their balances
• Savings and investments, including shareholdings and any assets held in trust
• Endowment policies
• Personal belongings of value
• Debts and liabilities including tax
• The value of business assets
• Pension values
• All sources of income
• A budget of your typical monthly expenditure and future expenditure

Supporting documentation, such as bank statements, payslips, tax returns, mortgage statements and property valuations, must be provided to verify the financial details disclosed.

Form E can take some time to pull together as you may need to get independent valuations on property, businesses or pension plans.

Once Form E has been completed, it is exchanged with the other party. You both have an opportunity to examine the forms and documents, ask questions, and request further information or documentation if needed.

What happens after financial disclosure?

Once you are both satisfied with each other’s financial disclosure, discussions can begin on a fair financial settlement.

There are various settings in which this discussion can be had, as listed above. Your solicitor can consider with you which one is likely to be most appropriate in your circumstances.

When a financial agreement is reached, your solicitor will formalise it into a Consent Order. This must be sent to the Court to review and approve. The Court will only do so if they believe it is fair.

Once the Consent Order is approved by the Court, it becomes a legally binding document and only then are your financial claims against each other dismissed.

If you are unable to come to an agreement on your own, either through direct negotiation or in another non-court forum, then a court may need to make the decision for you. The judge will consider all relevant factors, including the financial disclosure in Forms E before determining what the terms of the financial settlement order should be.

What if I think my ex-spouse lied on their Form E?

The purpose of making financial disclosure in divorce is to ensure there is transparency as to what the full financial resources available to both of you are. For this reason, the Form E contains a ‘Statement of Truth.’, which you would both need to sign to confirm that the information given is a full, frank, clear and accurate disclosure of your financial and other relevant circumstances

The court also has the power to fine or even imprison individuals for providing false information or if one party refuses to cooperate with the financial disclosure process. For example, in the high-profile divorce of Scot and Michelle Young, Mr Young, a billionaire property tycoon, was sentenced to 6 months imprisonment for persistently refusing to honestly disclose his financial details.

If you believe your ex-spouse is hiding assets, it’s important to speak with your solicitor. There may be steps they can take to stop your ex from moving money around during the divorce process for example.

If you have a financial order and it is later proven in court that your ex lied on their Form E, or failed to disclose all their assets and the order as made is obviously significantly unfair to you, you may be able to ask the Court to set aside the order and reconsider what the order should be. In that case, your ex may be ordered to pay your costs.

Can I refuse financial disclosure?

While it is technically possible to refuse to voluntarily disclosure details of your financial assets, the court can order you to provide the information anyway. If you ignore the court order you can be fined or face tougher penalties.

If either spouse refuses financial disclosure it is likely to prolong divorce proceedings which will increase legal costs of both parties and the court may assume that by refusing to comply you are likely to be hiding assets. This could lead to an unfavourable settlement for the party that refuses.

What should I do if my spouse refuses financial disclosure?

If you have concerns about your spouse’s financial disclosure, speak with one of our specialist family lawyers. We can provide advice on how to handle your situation and ensure that your interests are protected.

To speak with one of our solicitors, contact us by:

• Filling in our online enquiry form; or
• Calling us on 020 7485 8811