Divorce wealth protection: How to protect your money during divorce

If this is the transfer of your own money, the answer is ‘yes… but’. 

It is important to consider what money you are transferring before a divorce and whether this might be perceived later as trying to ‘hide’ assets or exclude them from the financial considerations in your divorce. It is vital to discuss this with your divorce lawyer before you transfer money. 

If you are transferring money between you and your spouse, by agreement, in anticipation of your divorce, then it is also essential that you discuss this with your family solicitor before you do so.

It is important to ensure that any money transfers are made as part of an overall agreed plan and recorded suitably. One of the key risks here is that the money is spent and that your spouse may look for another payment in the future.

While there is very little to stop you, the sensible answer is ‘no’. It would be very unwise to spend all of your money before a divorce. The court could see such a move as an attempt to deprive your spouse of a fair share.

The likely outcome is that the court would consider penalising you if you spent most or all of your money before a divorce. If your spouse suspects that you might do this, your spouse can apply to the court for a freezing injunction, preventing you from dealing with any of your assets, to protect them for the divorce. 

The best solution is to seek a family law consultation on this subject and consider engaging the services of a Pensions Actuary or a Pensions on Divorce Expert (PODE) to consider the value of your pension(s) against those of your spouse. 

It is also worth considering the proportion of your pension that might have accrued before your marriage to explore whether excluding a proportion in divorce financial negotiations is possible. 

Yes, it is possible but transferring assets (as opposed to money) is a sure sign of an attempt to exclude it from a divorce settlement or financial remedy outcome. Apart from that, the courts can divide other assets to eliminate the effect of the asset transfer. 

As with attempting to hide assets in a divorce, it is very difficult and incredibly risky. The courts can draw adverse inferences, which can lead to penalties in the financial distribution. The court can also order that the asset-transferer pay some or all of their spouse’s legal fees. 

You can, but it’s likely to be perceived by the courts as an attempt to hide an asset or exclude it from a divorce settlement or outcome and may be considered suspicious. It could also colour the court’s view of all of your other dealings and responses to questions. 

If you’re caught hiding assets, or the court concludes that you have, it can distribute assets to compensate your spouse for the hidden or sold asset(s). 

A clichéd example is a husband buying himself a brand new Porsche outright in the months leading to a divorce. The intention is to deprive his wife of a share of at least £100,000.  

By the time the court considers the value of the Porsche, it may have halved. But the judge would be perfectly entitled to distribute assets leaving the husband with the full hit of the purchase, depreciation and transferring assets to the wife as if the £100,000 had remained in the savings account. 

Ultimately, hiding/selling/transferring assets, to deprive a spouse of a fair share in divorce, and to deceive the court, is a fraud which is a criminal offence punishable by imprisonment. 

Trusts are often used to ‘protect’ assets in a divorce. While the family courts do not have investigatory powers like the police, they can ask probing questions. Inadequate answers and deficient disclosure will lead to adverse inferences being drawn and settlements eliminating the effect of the trust. 

Genuine trusts are relatively transparent and appear fair and reasonable. When trusts are hard to explain and justify, the courts are suspicious. Equally, trustees can be brought into cases to justify the trust. 

Invariably, creating a trust under false pretence to ‘protect’ money in a divorce will lead to the court drawing adverse inferences. Worthy trusts drawn up at the last minute before a divorce, even if honourable in purpose, also risk this court conclusion.