Blog by Emily Crick, solicitor
As a family lawyer I often see clients who suspect their spouse is hiding something. From a secret lover, to property abroad, to assets held in trust; in a divorce case, at times it may seem that everyone has something to hide!
Often my colleagues and I are presented with cases where on the face of it there are just a few low value assets, however one party appears to be indulging in a lavish lifestyle with no apparent limit to their spending. On the flip slide a former spouse may appear to live a frugal life yet has squirrelled away monies throughout the marriage in secret. How do you prove that your spouse’s financial position is different to that which they present?
In financial remedy proceedings both parties have a continuing duty to provide full and frank disclosure to the Court and to each other. This includes revealing their full bank statements, pension values, loans payable by them and owing to them and property and other valuations. The key to getting the crucial information needed to support a case is asking the right questions at the right stage in the proceedings or voluntary disclosure process.
If you suspect your ex is concealing assets then you should consider the following:
- When exchanging bank statements look at your ex’s transactions – do these show monies coming in and out from another (perhaps unknown) account or individual?
- Is your ex withdrawing significant amounts of cash and is this different to his/her usual spending pattern?
- Are there any single large transactions that could indicate high value purchases?
- The location of and true value assets is not necessarily obvious. Do not limit your enquiries to cash dealings. Think about whether your partner could have any other high value items such as vintage wines, antiques, overseas investments or an interest in land, particularly with development potential, which could affect its value considerably but may not have been disclosed.
- Assets may not have been concealed but could be undervalued. Pensions and business assets could have significant values which are usually subject to opinion and discovering a realistic value can depend on asking the right questions of the valuer. It is important to discuss together with a lawyer whether expert valuation reports will be necessary and who these should be prepared by.
If you suspect your partner is being paid in or receiving cash from third parties this is of course much harder to prove as the money may never go through an account through which it can be traced. If they are self employed for example, you may want to ask for a copy of their work diary and charge out rates. If your ex appears to be doing much more work than they are declaring, then you could ask the court at a final hearing to draw adverse inferences based on the evidence available – or the lack of it. This may suggest that they have assets or income they have not disclosed (although the source may not be obvious). The court may then make an order distributing assets on the basis that they have those monies available to them.
But what if your spouse has just become a spendthrift since separation? The court can consider financial conduct in its judgement where it would ‘inequitable to disregard it’. If your ex has gambled away huge amounts or spent money like there is no tomorrow since the divorce proceedings were issued, you may want to ask the court to “add back” those spent funds to the matrimonial pot. Of course, if the cash is really spent this is not always possible. However, it could mean your ex receives a smaller portion of the remaining capital – for example the equity in the family home. I should stress that this is where spending has occurred post separation and where such behaviour is different to that which he or she exhibited during your marriage.
If your ex has not yet spent monies – but you suspect they will do so imminently – in certain circumstances it may be appropriate to apply for a freezing injunction to stop a transaction before it occurs. This can mean disabling access to funds in bank accounts or restricting spending on accounts to a daily limit. It could be to prevent an ex drawing down the lump sum due to them from their pension. A freezing injunction can be effective against a third party. These can include a bank or pension administrator – or even another individual who is believed to be holding funds on trust for the other party where this is purely for the purposes of defeating a former spouse’s claim.
If you suspect your ex has hidden assets there are a number of different remedies and measures available to the court to uncover the truth and protect assets. These will depend upon the issues at stake, the stage the proceedings have reached and whether assets are hidden – or are about to be. If you are separated and suspect your former spouse may be hiding something, it is extremely important to seek early legal advice. Prevention is always better than cure. If you can take action before assets are dispersed or transferred, then you may be able to secure a much better financial outcome for yourself and your children.
If you have any queries about issues raised in this blog, or any aspect of separation or divorce, you can contact Emily by email firstname.lastname@example.org or telephone 01748 902 619 Follow Silk Family Law on Twitter at @silkfamilylaw
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