One of the most challenging aspects of financial remedy proceedings is uncovering assets which one spouse is hiding or attempting to hide. Concealing financial resources undermines transparency and fairness, leading to unjust outcomes.
What Are Hidden Assets?
Hidden assets refer to financial resources a party deliberately fails to disclose during divorce proceedings. Common examples include:
- Secret bank accounts
- Business interests concealed through complex ownership structures
- Investments held offshore
- Undisclosed property
- Cash income not declared to tax authorities
Failing to disclose assets can distort the division of financial resources, leaving the disadvantaged party with an unfair share.
The Duty of Full and Frank Disclosure
Both parties in financial remedy proceedings are under a strict duty to provide full and frank disclosure of their financial circumstances. This duty is essential for the court to make a fair and equitable decision. Non-disclosure can lead to serious consequences, including:
- The setting aside of any order made based on false information.
- Costs orders against the non-disclosing party.
- Potential findings of contempt of court, which may result in fines or imprisonment.
Red Flags of Hidden Assets
Suspicion of hidden assets may arise if a party:
- Displays significant discrepancies between their declared income and lifestyle.
- Claims a sudden decrease in income or business profitability.
- Has unexplained financial transactions or debts.
- Refuses to provide full and frank financial disclosure.
How to Identify Hidden Assets
If hidden assets are suspected, a variety of tools and strategies can be employed. Some examples include:
- Disclosure Requests: Parties can request financial disclosure through questionnaires or court orders.
- Forensic Accountants: These specialists analyse financial records to trace undisclosed income or assets.
- Third-Party Disclosure Orders: The court can compel banks, employers, or other entities to provide relevant financial information.
- Land Registry Search: A Land Registry Proprietor Name search can reveal any properties that your spouse owns in England and Wales.
Remedies for Non-Disclosure
If hidden assets are discovered, the court can take corrective actions, such as:
- Ordering the non-disclosing party to pay some of your legal costs.
- Imposing adverse inferences, where the court assumes the non-disclosed assets exist and makes orders accordingly.
- In cases where assets have been transferred to a third party with the intention of defeating your claims for financial relief, the court can set aside the transfer so that the asset can be made subject to your financial claims.
Conclusion
Hidden assets present a significant challenge in financial remedy proceedings. However, the legal system provides robust tools to identify and address non-disclosure. If you suspect your partner is concealing assets, seek legal advice early to ensure your financial interests are protected.
Transparency is key to a fair outcome, and the courts are committed to ensuring both parties meet their obligations in disclosing their true financial positions.
How Nelsons can help
Julia Kolomiiets is an Associate in our expert Family Law team, which is ranked in Tier One in the independently researched publication, The Legal 500. Julia specialises in private family law, advising on separation and divorce, including financial settlements and arrangements for children, and domestic abuse.
If you are suffering domestic abuse and would like some advice on the steps you can take, then please contact our Family Law team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form. We will be happy to discuss your circumstances in more detail and give you more information about the services that we can provide.
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