During divorce you will inevitably come to an agreement about how you and your ex-spouse split any assets that you own. While fair, the process does rely on both parties being open and honest about their financial assets. However, in some cases ex-spouses fail to disclose some assets in a deliberate attempt to avoid them being split when the marriage ends. Suzanne Grant, Forensic Accountant at Stowe, explains more.
When financial assets disappear
Whilst most people are generally open and honest about their finances in divorce cases, it can sometimes be the case that assets ‘disappear’ as one party tries to hide them from their spouse until the financial settlement has been agreed and finalised.
This is often attempted by way of:
- giving / ‘gifting’ assets to friends and family to hold onto
- manipulating books and records, often in owner-managed family businesses, to report a worse trading and profitability scenario than is actually the case
- employees asking their employer to delay the payment of bonuses / incentive / commission payments
- understating / omitting income when reporting to HMRC
- denying that an asset exists
- undervaluing assets eg business interests
- using cryptocurrencies
- setting up Trusts
- downplaying the parties’ lifestyle during the marriage
- holding assets offshore as this generally makes them much harder to locate and value.
Divorce and financial disclosure
Finding hidden assets or being satisfied there’s no possibility that they have been hidden, ensures both parties are treated fairly when it comes to division of the matrimonial ‘pot’. In other words, each party is content that the other has provided full, frank and clear financial disclosure, as they are legally obliged to do. Failure to provide that disclosure is taken seriously by the Courts and can result not only in an existing financial order being set aside, but also with a costs order and potentially criminal proceedings being brought for fraud.
The importance of trust
Alarm bells should start ringing if one party becomes more controlling or vague about family finances than has historically been the case, and / or perhaps also restricts or refuses to let their spouse have any sort of ongoing involvement in them. Loss of trust often follows quickly thereafter and that’s when prompt, professional assistance should be sought.
Our specialist solicitors are able to advise on the various steps that can be taken to ensure any assets a spouse may be attempting to hide are identified and fully accounted for, and also to prevent any disposal of assets taking place before settlement terms are formally agreed.
Forensic accountants can also help by investigating any irregularities in personal, and where applicable, business finances. At Stowe Family Law we have an in-house forensic accountant who has many years’ expertise within this field and who works nationally as an integral part of our divorce teams.
With the option for both legal and forensic accountancy input in a case, we can quickly help to determine if there is any merit in a client’s suspicions and thus ensure that they gain a true and accurate picture of the overall finances in their case. Our aim is always the same – to make sure that our clients are treated fairly and receive an equitable division of the assets.
Get in touch