For individuals going through a separation and divorce, the process can already be stressful enough without having to negotiate a financial settlement for the division of matrimonial assets.
Through the compulsory process of financial disclosure, it is possible for both parties to accurately establish the value of the ‘matrimonial pot’, which can help speed up the settlement process, create transparency and trust, and achieve desirable outcomes for both parties.
Simply put, financial disclosure is when each party openly provides details of their income, assets, liabilities and forecasted budget – this transparency will ensure fairness when it comes to agreeing a settlement.
Although it may seem straightforward, any deviation from the instructed process could land you in hot water, as recently seen in a High Court divorce battle, where the ex-husband now faces a potential jail term for failing to provide the correct documentation. So, what does the process of financial disclosure involve and what should parties watch out for?
The importance of Form E
When providing a detailed breakdown of your income, assets and liabilities, a Financial Statement otherwise known as Form E, will often be used. This Form is supported by documents which provide evidence/proof of the disclosed details.
The lengthy and detailed nature of the Form E can be daunting for a lot of people, especially given its importance within Court proceedings, where its use is mandatory. However, it is also commonly used during voluntary financial disclosure due to the detail it provides.
Aside from details about the assets and how they should be divided, the Form also includes background information from both individuals, including details about the marriage and any children they may have.
Its importance should not be understated, as both parties are required to sign a Statement of Truth confirming that full, frank, clear and accurate financial disclosure has been given. For this reason, legal support should be sought as early as possible, especially as there can be delays in obtaining the required evidence.
Once completed, finalised and signed, it will be exchanged with the other party, giving your legal team an opportunity to review their Form and documents, which may include mortgage statements, wage slips, pension valuations and business accounts.
Ask the necessary questions
Following the exchange of financial disclosure and associated documents, your legal counsel will consult with you to send a list of questions to the other party about their Form.
This is known as a questionnaire and can include questions about anything that has been missed from the Form E or about any income, assets or liabilities that have been disclosed but need to be clarified.
Given the need for full, frank, clear and accurate disclosure, it is critical that any uncertainties are ironed out at this stage, even if that means requesting additional supporting documents relating to specific assets.
Once the questionnaire replies have been gathered, your legal team will be able to accurately assess the situation and offer advice to help you achieve the best possible outcome. Even during voluntary financial disclosure, participation from both parties is needed to reach an amicable solution.
If either party fails to provide full and frank financial disclosure within a court setting, then they run the risk of being found guilty of contempt of court, which could lead to a fine or imprisonment.
This was recently highlighted in a lengthy High Court divorce hearing, whereby the ex-husband had failed to provide the documentation as directed, but without any explanation as to why. A barrister representing the ex-wife said that “the breaches were clear and obvious and must be punished accordingly” – the judge agreed and ruled that he had breached orders made during proceedings, and he now awaits sentencing.
Legal guidance is key…
There is no getting away from the fact that most divorces are emotionally stressful and these anxieties can be compounded by any looming financial uncertainty surrounding the division of matrimonial assets.
No matter how small an asset or pension may be, everything must be disclosed to ensure the fairest outcome is achieved. For this reason, navigating the process can be confusing, especially if there is a family business involved.
Rather than go it alone and risk falling foul of strict legal requirements, it is best to consult an experienced family law team who understand the ins and outs of financial disclosure and can guide you through the process.
Remember, the role of your legal team is to find the best possible outcome, so the decision to seek legal advice could help you secure a stronger financial position, allowing you to move on from the divorce quickly.
