HONESTY, DISCLOSURE AND DIVORCE 

Published on 27 November, 2024 | Melanie Hadwin

No matter how amicable a couple is, the end of a marriage is never a particularly pleasant experience.

Even so, it is imperative to respect the process in order to avoid aggravating any tension or natural emotion that there may be.

An integral part of that is the division of the couple’s assets.

Discussions as to how best and most fairly that is achieved begin with the “full and frank disclosure” of both individuals’ financial and other relevant circumstances which is required by law (https://assets.publishing.service.gov.uk/media/63c132468fa8f516ac0d5a6d/Form_E_0123_save.pdf).

So, it is with interest that I’ve been reading media coverage of a recent survey by one financial services company (https://www.yourmoney.com/news/have-you-or-your-partner-got-secret-savings/).

The research found that one-in-six people have savings which they’re keeping secret from their partners.

Furthermore, the practice was twice as common among married couples than their cohabiting counterparts.

Among the reasons given for having a hidden cache of cash was that people didn’t trust their partner with money. One-third of those questioned admitted that they were squirrelling sums away in case their relationship came to an end.

Therein lies what could be a considerable problem.

As I have already explained, the divorce process brings with it a legal duty to make a “full, frank and clear” disclosure about your means.

That’s not just those assets which you have already derived benefit from, but everything.

The failure to do so has a number of implications which I’ve become familiar with over the course of my career.

That’s why this latest research doesn’t come as any real surprise to me.

During divorce proceedings, it’s customary for spouses to request 12 months’ bank statements from each other (part of the requirement of the document, known as Form E, on which such details are set out) to help provide a complete picture of respective finances.

It is possible to go back even further but there needs to be justification for doing so as the exercise is certainly not a fishing expedition.

If evidence is found that there may be other, undisclosed accounts, it essentially means having to work through information provided by the other party – following the money, so to speak.

I have dealt with a number of matters over the years in which such investigative efforts have turned up sums totalling tens of thousands of pounds which had not been divulged by my clients’ former spouses.

Exploring and uncovering non-disclosure is time-consuming. It makes the divorce process even longer than it should be.

Given that the latest figures published by the Ministry of Justice show that divorces take almost 16 months to conclude on average, the forensic examination of assets can unnecessarily prevent spouses who have realised that they can no longer be together from moving on with their lives for a lengthy period of time (https://www.gov.uk/government/statistics/family-court-statistics-quarterly-january-to-march-2024/family-court-statistics-quarterly-january-to-march-2024#divorce).

As well as impacting the duration of a divorce case, there can be stiff sanctions for those found to have deliberately concealed assets.

In addition to potentially facing a greater share of the overall costs associated with the process, Form E makes clear that there could even be penalties under criminal law.

Whilst the law demands complete openness, the amounts which are found to be undisclosed will be taken into account in the general context of a divorce.

If a couple is jointly worth many millions of pounds, £50,000 might not be thought significant when weighed against the overall value. However, if the total assets under consideration are £150,000, such an amount will naturally be afforded greater weight.

Keeping cash or other assets secret from your other half might seem prudent or private to some people, such as those who contributed to the latest research.

If the secrecy outlasts their relationships, however, they may learn a painful lesson about how honesty really is the best policy, whereas secrecy can come at a price.