When going through divorce proceedings, it’s extremely important that the parties consider and address the financial claims arising from breakdown of their marriage as soon as possible. This is because the Courts in England and Wales have the power to make a wide range of Financial Orders in divorce proceedings, including Periodical Payments Orders, Lump Sum, Property Adjustment and Pension Sharing or Attachment Orders.
Both parties have a duty to provide full and frank disclosure of their financial circumstances. This obligation applies regardless of whether financial matters are contested and formal Court proceedings are issued, or matters are resolved by consent between the parties. Financial disclosure should be collated and exchanged as early as possible in the divorce process to give the parties time to take proper legal advice, consider any taxation issues which need to be addressed and obtain any expert evidence required, depending on their respective circumstances.
Legal advisers are not able to provide clients with any definitive advice in the absence of seeing both parties’ financial disclosure and also, where appropriate, obtaining any expert valuation, actuarial or accountancy evidence which is needed based on the facts of their case.
Financial disclosure can be exchanged on a voluntary basis either via solicitors or during mediation. If one party issues an Application for a Financial Order and as such formal contested Court proceedings are issued, then the Court will order both parties to complete a Financial Statement (Form E). This is a detailed form which requires careful consideration, and is regularly completed by parties on a voluntary basis. The form is extremely useful as it enables the parties to provide their financial disclosure and supporting documentation in a structured form. It also requires the parties to focus on their own current and future income needs and those of any children they have, as well as their capital needs which is critical in divorce proceedings.
Below is a summary of the key information and documentation which, amongst other things, the parties are expected to provide as part of the disclosure process:
- Details, including Title Numbers of any properties or land which they have a legal or beneficial interest in whether in or outside of the UK. The parties will need to provide an estimate of the current value of any properties or land which they have an interest in and details of any charges/mortgages which are secured against the above.
- Details of any bank or building society accounts in which they have an interest, whether in their sole name or in joint names with another party. The parties are expected to supply narrative statements for each account covering the last 12 months. They are also expected to disclose whether they are holding any accounts or investments in Trust, for example, for any children of the family.
- A summary of any investments which they have an interest in, for example, ISAs, crypto currencies, bonds or shares together with documentary evidence of their current value.
- If applicable, a copy of their last filed Tax Return and the related schedules/assessments.
- Copies of their wage slips for the last three months together with their P60 certificate and, if applicable, P11D certificate for the last financial year.
- Details of any outstanding unsecured debts or tax liabilities.
- Details of any life assurance or endowment policies which they have an interest in.
- Details of any Trust(s) in which they have an interest.
- A summary of their business interests together with copies of the trading accounts for the last two financial years.
- Documentary evidence/a statement detailing the current transfer value or fund value of any pension plans in which they have an interest.
When full and frank disclosure and where appropriate expert evidence has been obtained, the parties can then start to negotiate a financial agreement. When an agreement has been reached a Consent (Financial) Order can then be prepared. This document will record the terms of the settlement that have been negotiated and agreed between the parties.
The Consent Order can be submitted to the Court for it to be approved by a District Judge once the Decree Nisi or Conditional Order has been pronounced in the proceedings. It’s important to remember that the parties also must complete a Statement of Information Form for the Court. This must be filed with the Court together with the agreed/signed Consent Order.
A Statement of Information Form is a summary of the parties’ respective financial circumstances and details the net effect of the terms of the Consent Order. This is a strict requirement and the Court will not consider a Consent Order without this form. The document will be processed using the information which the parties provided as part of the disclosure exercise.
Collating and exchanging financial disclosure is a vital part of the divorce process and it is essential that care and attention is given to this matter early in proceedings so that a fair financial settlement can be achieved as soon as possible.
