What is financial disclosure and why is it necessary?
Financial disclosure is a term given to describe the giving of your financial information, usually supported by documentary evidence, to your spouse and to the Court. After issuing a Petition for divorce this is usually the next step to achieving settlement. As lawyers we are unable to provide you with any specific advice regarding your current and future financial position without seeing both yours and your spouse’s financial disclosure.
Financial disclosure is essential whether you intend to use the court to achieve settlement or you are looking to reach terms of settlement without court proceedings. In fact, the court will order financial disclosure as soon as an application to court has been made, before any hearing even takes place.
Disclosure takes place using a standard form called a Form E. The same form is used in every single case whether you are ultra-wealthy or you are looking for a way to repay matrimonial liabilities. The form is relatively long and asks you to write down and provide supporting evidence of your income, assets, pensions, liabilities and so on.
But why is all this necessary?
Within your marriage you and your spouse may have always been totally open and frank with each other about your finances. You may have even shared a joint bank account and has access to a filing cabinet full of supporting letters and documents. Often a marriage of many years gathers an inevitable intertwine of family finances.
The law is very clear when it says that the available resources of a marriage must be divided fairly upon separation. When a lawyer is asked ‘what is fair’ he or she must base her answer upon clear facts supported by evidence. Neither your lawyer nor a court can know what will be a fair solution unless everybody knows the full and true financial picture.
Many lawyers will tell you of their experiences of finding hidden assets or income and many will tell of business valuations and pension provisions not being as one originally thought – no matter how much knowledge a spouse may have available to them.
The providing of truthful financial disclosure is essential. If you or your spouse gives false information this could be deemed as a criminal offence or contempt of court. If a court order is made based upon incorrect financial disclosure a party may ask the court to reopen the case and make a new order.
How can I prepare for giving financial disclosure?
It will assist greatly if you can provide your financial disclosure in an organised way. We will provide you with a list of the documents we will require in order to prepare your Form E and it will reduce your costs significantly if the supporting evidence you have gathered is presented in a lever-arch folder with dividers/markers identifying the relevant sections.
You will be asked for historical bank statements and evidence of your pension value, if applicable. These documents can take some time to come through therefore it is beneficial if you contact the relevant organisation to obtain the information as soon as possible.
You may also need information from your financial advisor or accountant and so it is often wise to inform them of the divorce proceedings at an early stage so that they can be on standby to provide any necessary information when required.
What if my financial circumstances change after I have completed my Form E?
You are under a continuous obligation to provide your spouse and the court with up-to-date financial disclosure. If circumstances change, which they often do, advising the other party of the change should not be considered detrimental to your case. It is an obligation and any change in circumstances should be communicated to your lawyer immediately. Your lawyer will then discuss with you how this change will affect your case, if at all, and will inform all relevant parties of the updated disclosure.