Hidden assets

Resolution of financial matters relating to the end of a relationship is based on both parties disclosing their full financial situation.

Unfortunately, this does not always happen and when it doesn’t, you may need specialist help to get to the bottom of it.

Disclosure

When reaching a financial settlement, you and your partner are required to provide full and frank disclosure to one another. This means that you must tell each other and the court all matters that are material to the case. This includes information that you know, but also information that would have been known had you made proper enquiries.

Your full and frank disclosure is usually summarised and presented in a document called Form E. This can be completed on a voluntary basis but if you are in court proceedings, then Form E is mandatory. The document summarises your financial position and requires you to annex evidence (such as bank statements and payslips).

Once Forms E are exchanged, you and your partner have the opportunity to raise questions of the other about any gaps or uncertainties in their financial disclosure; this is called the raising of questionnaires. This should not be a fishing expedition, i.e. you cannot ask lots of questions which don’t relate to the disclosure provided in the hope of finding something. 

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Questionnaires will be reviewed by the court at the first hearing in financial proceedings and they have the power to strike out questions that they do not think will assist the court. You will then both be ordered to respond to the questionnaires. In larger and more complex cases where there is a risk of non-disclosure, the court may also order for the parties to exchange and respond to Schedule of Deficiencies. These schedules highlight any further disclosure issues that have come out of the Replies to Questionnaire.

This duty is continuing throughout the court proceedings. As well as the process of Form E and questionnaires, there will also be specific touchpoints throughout proceedings, usually before each court hearing, where you have to provide updated documents to evidence your up-to-date financial proceedings. But even outside of this disclosure, you maintain a duty of full and frank disclosure. This means that if something comes to light that is material to the case, it needs to be disclosed to your partner.

Dealing with hidden assets

Sometimes someone going through a divorce is tempted to hide assets and not disclose them. Whether that’s hidden bank accounts, undisclosed shareholdings, unusual spending, missing yachts and even secret families - we have seen them all. Usually, that person believes that by hiding assets, they will get a better financial outcome in divorce, but this is not the case.

Hiding assets can have serious consequences in financial settlements and can even lead to an increased settlement to the other party. We are experienced in identifying hidden assets and advising our clients on their treatment within negotiations and court proceedings. We do this by working with our clients to understand potential concealed assets and instructing third-party experts like forensic accountants to support our work.

In the face of an untruthful partner, it may be just as tempting to resort to opening up your ex's mail, hacking into their email account or raiding their filing cabinet to find answers. This is referred to as ‘self-help’ and is not encouraged by the courts. In some circumstances, self-help can be a criminal offence. So you should always seek advice from a family law expert before trying to investigate hidden assets.

How we can help

We will always advise you on the proportionality of pursuing hidden assets. There may be some circumstances where the costs of investigating a hidden asset outweigh the asset itself or would be disproportionate in your case. We can guide you through your options.

We have a wealth of experience when it comes to discovering hidden assets. For example, we have: 

  • Successfully run an "add back" argument where our client's ex had wilfully and unnecessarily spent money, jeopardising our client's ability to financially provide for their children.
  • Successfully obtained a variety of injunctions to freeze and preserve money and property belonging to our client's ex, where there was a high risk that he would transfer the assets out of England and Wales to defeat her financial claims against him.
  • Successfully re-opened an existing financial order where it became clear that, at the time the order had been made, our client had not been provided with full or frank disclosure and as a result had not received a fair award.
  • Worked with other specialists, unravelled a complex trail of asset-holding structures deliberately designed to hide the true owner of the assets and defeat our client's financial claims.
  • Advised a client where her ex had behaved very badly by undervaluing assets, underpaying himself salary and purchasing property in the name of a nominee amongst other things.
  • Advised clients who have come across confidential documents that they believe may be helpful in resolving their case. 

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Our team of specialist family lawyers are hee to support you if you're facing issues related to hidden assets. Speak to our team today. 

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Hidden assets FAQs

There are a variety of methods to identify hidden assets held by a party. Sometimes these can be as simply as reviewing bank statements that have been provided as part of the disclosure process and noticing transfers to or from an account that has not yet been disclosed. Other times our client will have a working knowledge of the relationship’s finances and know that certain assets haven’t been disclosed.

In some circumstances, it may be necessary to seek the assistance of an expert such as a forensic accountant to review documentation to understand whether there is something hidden. There are also applications to court, such as for a disclosure order, that you can make to obtain further information about hidden assets. Our lawyers will be able to talk to you about concerns you may have and the most proportionate response to dealing with them within your case.

The courts can employ a range of powers when dealing with hidden assets. These include:

  • Disclosure order – the court can make a disclosure order to a third party, such as a bank, in order to obtain information about an asset that the party themselves are not disclosing.
  • Add back– if a party has hidden an asset, the court can make the decision as if that asset were disclosed.
  • Adverse inferences – the court can draw adverse inferences where a party does not provide full and frank disclosure which could lead to a higher settlement to their partner.
  • Contempt of court – within court proceedings, parties will sign a statement of truth declaring that they have provided full and frank disclosure. If it turns out that they have not, contempt of court proceedings could be brought against them.
  • Set aside – if it is found that a settlement has been reached but that full and frank disclosure was not given, then the order could be set aside completely if the court would have made a different order but for the lack of disclosure.
  • Costs order – where a party continually fails to disclose, then the court may consider this litigation misconduct and make a costs order against them in favour of the other party.
  • Adjournment – if the court considers that it would be unfair to finalise the claim at this stage due to one party being dishonest about their assets, then they could adjourn the case.
  • Lack of privacy – if a party wilfully gives false information to the court, the court may suspend the implied duty of confidentiality in relation to that conduct.

     

You should speak to your lawyer if you believe your ex-partner is hiding assets within settlement negotiations or court proceedings. They will be able to advise you on how best to deal with it. You should not undertake investigations yourself or look through your ex-partner’s personal items for evidence. This is called ‘self-help’ and is looked on poorly by the family courts and in some circumstances, it is a crime.

Once a final financial settlement has been reached, whether directly between you and your partner or through the courts, that would usually be the end of the matter. It will likely contain a clean break clause, preventing you from making any further claims against your partner’s assets.

However, if your partner did not disclose all of their assets when that settlement was reached, you may have grounds to re-open and re-negotiate the settlement. You would need to make an application to set aside the order. You would need to prove to the court that your partner did not give full and frank disclosure and that if they had, a different financial settlement would have been reached. If your application is successful, you could claim the costs associated with your application against your partner so they would need to pay your legal fees. There is also a risk that your partner could be held in contempt of court, which is punishable by committal. 

No, this is legally privileged material. Legal privilege refers to the protection afforded to communications between a lawyer and their client, including any legal advice that may be given. This means that material between you and your lawyer doesn't need to be disclosed in court.

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