(In)equality of arms in divorce

Divorce|June 7th 2015

Nick White, Head of Forensic Accountancy at Stowe Family Law, discusses the distribution of assets during a divorce.

As far as the law is concerned, the starting point for distribution of assets in divorce is 50/50.  It is also the case that each party in divorce proceedings pays their legal own costs, unless what is termed ‘litigation misconduct’ has occurred – i.e. if one the parties in the case has done things they should not have done, such as failed to properly disclose their assets. This is now the only ground on which an order that one side pay the other’s costs can now be made in financial proceedings following divorce. Gone are the days where the spouse with the majority of the assets or cash (usually but not always the husband) paid all the fees.

This “equality” approach may be noble in its aims, but in many of the cases we see there is an inequality in the ability of the parties to achieve that 50/50 outcome.  This inequality happens because the spouse with control/ownership of the assets wants to keep as much of those assets as possible, and to pay as little as possible to their former partner. This certainly isn’t noble but as we all know, it is human nature, especially in an acrimonious divorce.

When this happens, the process will usually involve a number of interlinked layers. The husband (let’s assume it is the husband, for the sake of brevity) will want to control the assets, including the wife’s access to the family’s finances. In fact he may try to put beyond her reach.  He will try to manipulate the values of those assets, particularly business interests and trusts, as well as the income he receives from them. I have lost count of the times I have seen business accounts that show the worst results for a decade in the year the parties separate, but where there is a dramatic turn-around  as soon as the divorce settlement is agreed.

The husband may even try to manipulate the wife’s emotions by claiming for instance, that he has nothing therefore she will get nothing or perhaps by depriving her of funds to pay any solicitor she wants to instruct.  The final layer in this unsavoury tangle is often the husband making a confrontational “take it or leave it” offer to the wife, one which the wife may feel almost compelled to accept because she has been backed into a corner.

If this has been your experience, the important thing to remember is that there is support available and you are not alone! The need for competent legal advice is a given, but forensic accountants such as myself can be a valuable additional weapon in your armoury.

We can identify the key financial issues at a very early stage in the divorce proceedings, and even give preliminary views on potential business values and likely incomes. This means that we can progress matters quickly and provide clients with reassurance at that early stage. It also means that if your spouse is trying to hide assets or distort their value to avoid a fair settlement, we can track down and uncover that deception, making all the difference to the end result.

Author: Nick White

Nick White heads Stowe Family Law’s in-house forensic accountancy department. He is a chartered accountant of 30 years’ standing.

Comments(4)

  1. Dr Grumpy says:

    The problem remains is how do you prove that there are hidden assets even if you know that they have hidden money away throughout the marriage? From my own experience my ex made up her mind to divorce me after the birth of our first son but I wasn’t aware of this until some 6 years later when she executed her master plan! Unfortunately I hadn’t been able to get the documents I needed before being locked out of the FMH when trying to get old statements the banks only go back so far! Her legal team kept refusing to provide certain documents.
    I have been told that she has a ISA which wasn’t declared in her Form E but if I had presented this at court then as a result of the Imerman v Tchenguiz it would have been inadmissable! I just wonder what would happen if years later I was able to prove that she had hidden assets at the time of the divorce?

  2. Andrew says:

    Perhaps nobody should be allowed to make or defend an application for financial relief without giving the opposing party an open consent to search any records in her or his name held by any financial institution anywhere in the world or of course by HMRC!

  3. Pete says:

    “This “equality” approach may be noble in its aims, but in many of the cases we see there is an inequality in the ability of the parties to achieve that 50/50 outcome. This inequality happens because the spouse with control/ownership of the assets wants to keep as much of those assets as possible”
    —————————————–
    Surly Nick you forget the inequality of the legal system where a woman can empty her account and constantly accuse you of hiding money before going to court while your own solicitor tells you “well your going to die before her so she deserves more”. I could go on but I’m sure you have read most of the post’s on this site.

  4. Nordic says:

    The potential problems and issues raised in this post are a creation of the legal system in this jurisdiction. A legally binding regime for division of matrimonial assets would remove all this uncertainty, eliminate a huge source of parental conflict and save vast amounts of court time. Such systems can be studied in virtually every other northwestern European jurisdiction. The senseless zero-sum games instigated by the current financiel relief process serves only one purpose – to make money for lawyers.

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