Financial disclosure in divorce
Financial disclosure is the completion of documents that clarify your financial position as part of the divorce process.
Whether you are completing your divorce by negotiating directly with your ex-partner or spouse, through solicitors, via mediation or the courts, both parties should provide full and frank disclosure of their assets and debts.
This process is the only way a solicitor can advise you in detail as to whether the settlement is fair and reasonable.
The financial disclosure process
The process of financial disclosure provides the other party with information regarding their financial circumstances, and evidence to support it.
It is often facilitated through the completion of Form E (view a Form E here), which is the document the court will direct the parties to complete if an application is made for a judge to determine how their assets should be divided.
Although it derives from the court process, Form E is commonly used when the parties are trying to reach an agreement, whether directly with each other, through mediation or solicitors.
A Form E may include information on the following, together with supporting documentation:
Bank account balances
Savings, investments or other such account balances
Pension cash equivalent values
Once Form E has been completed (with all of the relevant supporting documents attached), it is exchanged (preferably simultaneously) with the other party.
Each party then has an opportunity to consider the details provided and, should they wish, ask for further evidence or clarification.
The intention is to ensure that
(a) the parties believe they have all the information they need to understand the other’s financial circumstances and
(b) there are no hidden assets or otherwise suspicious transactions.
Read the do’s and don’ts of how to complete a Form E
Other elements of financial disclosure
There are other elements of financial disclosure which are worth considering.
The value of any assets
If there are any assets of significance, but the value is disputed, an expert will likely need to be instructed. This can include surveyors to value property, chartered accountants to value businesses, or actuaries to assist in valuing pensions.
The mortgage capability of both parties
It is important to understand how much each party can borrow on a mortgage, to rehouse themselves in the future.
Each party should each speak to a mortgage broker who can then write to confirm the details regarding their maximum borrowing capacity.
The parties’ reasonable housing needs
To determine what each parties’ reasonable housing needs are likely to be, they should each provide particulars for properties on the market for sale that they believe would be suitable for themselves and the other.
If both parties are satisfied with the information, then they are well placed to begin negotiating a fair and reasonable divorce settlement. If or when an agreement is reached, then this should be formalised into a document known as a consent order, which is then sent to the court.
The court will review the agreement and, providing it is considered reasonable and fair, will formally approve the order.
Once a consent order is approved, it offers the parties security and certainty in how the assets will be divided and that their agreement is enforceable.
Why is financial disclosure important?
Without financial disclosure, you cannot be sure of your ex-partner’s/spouse’s assets. This is crucial because the law in this area is discretionary so that different financial circumstances lead to differing financial outcomes.
Therefore, if you do not know what the correct financial circumstances are, you cannot be sure that the agreement you have reached is fair.
Full and frank disclosure enables both parties’ solicitors to have a clear picture of the financial assets in a marriage, assess the circumstances and then advise as to the correct way a court is likely to approach a division of assets.
Get in touch
If you would like further advice, please do contact our Client Care Team here to speak to one of our specialist divorce lawyers.