What is Financial Disclosure in Divorce?

Unfortunately, this is not always the case, with some believing that they can manipulate the financial settlement process to their own advantage. This is why the law demands full financial disclosure during divorce proceedings, meaning that assets and other financial interests can be apportioned equitably.  Anyone who doubts this should review the high-net-worth divorce case of Tatiana Akhmedova (W) from Russian Billionaire Farkhad (H) Akhmedov, which recently reached the High Court in Akhmedova v Akhmedov and others [2021] EWHC 545 (Fam). In this case, W had been awarded £453 million in 2016, but H spent the intervening years trying to redistribute his assets out of her reach, giving large sums to his son. W sought remedy at the High Court. In ruling in favour of W, Justice Knowles stated of H’s son; “He lied to this court on numerous occasions, breached court orders; and failed to provide full disclosure of his assets. I find that he is a dishonest individual who will do anything to assist his father, no doubt because he is utterly dependent on his father for financial support”. So what does full disclosure of assets entail?

What is meant by full financial disclosure in divorce proceedings?

Both parties to divorce proceedings are required by law to provide ‘full and frank’ disclosure of their finances to ensure that any financial settlement order reached is fair and reasonable. Section 25 of the Matrimonial Causes Act 1973 sets out the basis on which courts are required to come to a fair settlement, including “the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future”. As such, without a clear picture of the financial resources of each individual, any financial order made is likely to be unfair.

Where parties to a divorce cannot reach an amicable financial settlement between themselves, they may seek to request a financial order from the court. One of the first steps is to complete ‘Form E’ (Financial statement for a financial order under the Matrimonial Causes Act 1973/ Civil Partnership Act 2004), which allows the court to gain a full picture of the financial position of each party to a divorce.

What information is required in Form E?

Form E requires a considerable amount of detail, including:

• Children and their living and educational arrangements
• Child maintenance arrangements
• Property owned, including equity value
• Bank accounts, including balances
• Investments
• Life insurance policies
• Monies owed to the signatory
• Assets worth over £500, including cars, collections, jewellery, furniture
• Liabilities
• Business assets
• Pensions
• Any other assets
• Income of any sort, including employment, self-employment, dividends, rental income, state benefits.

Form E also covers the financial requirements of each party, including income needs, capital needs, and any other costs. The final section allows the signatory to outline the type of settlement they are seeking, i.e. what to do with the family house, whether a clean break is required, and what should happen with pensions.

What happens if a person does not provide full and frank financial disclosure in Form E?

Intentionally hiding the true extent of financial assets during divorce proceedings is tantamount to lying to the court and, hence, a criminal offence. A judge making a decision on a financial settlement following a divorce will also take any such behaviour into account when issuing an order. If you have reason to suspect your ex-spouse is concealing assets, it is important to explain this to your divorce Solicitor as soon as possible. Where necessary, they can bring in a forensic accountant to look closely at the matter. Forensic accountants are experts in investigating complex financial arrangements designed to hide assets, often in other forms and jurisdictions, such as through offshore trusts. If there is a reason to suspect the other party is going to dispose of an asset, a Freezing Order can be implemented by the court to block this from happening. 

Final words

For the sake of both parties and the children involved in a divorce, full and frank disclosure of financial assets is paramount. Courts in the UK do not take kindly to any attempt to mislead them and will come down hard on anyone who attempts to hide their assets from their ex-partner. This is especially so where there is a clear imbalance in financial worth and income potential. A family law Solicitor specialising in divorce financial settlements working in conjunction with a forensic accountant will ensure you achieve the best possible outcome for yourself and your children.

For a free consultation regarding financial settlements during divorce proceedings, please call us on 0208 300 6666.