What is financial disclosure in divorce?
When a couple goes through the divorce process, they will normally need to consider how they will divide their finances. Agreeing on a financial settlement that both parties consider fair is often the most challenging element of a divorce. It can become a source of conflict for a separating couple, but it doesn’t need to be. With effective financial disclosure and the right legal advice, dividing finances can be dealt with amicably, and outside of court.
What is financial disclosure?
Financial disclosure is a necessary part of agreeing on how finances should be divided as part of a divorce, particularly if there are formal financial remedy proceedings.
There are two stages to working out how matrimonial finances should be divided. The first stage is understanding what everything is worth. It is important that a couple are able to make an informed decision. To do that, both parties are asked to provide details of their finances to help establish the value of the matrimonial ‘pot’.
This is all detailed on a financial statement called a Form E. This is a standard court document that provides a comprehensive summary of your finances. It is compulsory when court proceedings are issued. It is such a useful document that many lawyers will recommend using it even when it is not compulsory, where both parties agree to negotiate a settlement and avoid court if possible.
Financial disclosure should include details of all assets that are held jointly between the parties or in the sole name of either party. It should also include any assets held with another third party.
How do I prepare a Form E?
Your divorce solicitor will provide you with a Form E to fill out. It may be that not all sections are relevant to you, however, you must fill it out accurately and honestly.
Once you have filled it out, you should ask your solicitor to check it over. They will be able to advise you on any elements you have missed or where more information would be helpful. You will then need to sign a Statement of Truth confirming that the contents of the form are true to the best of your knowledge and belief. The information will be exchanged with your spouse who should also have completed a Form E. This ensures that you both have a clear picture of your financial resources. If court proceedings are necessary, your solicitor will also send the Form E to the court.
You can fill out a Form E yourself if you are acting as a ‘litigant in person’, however, it is strongly advised that you seek legal advice to ensure that you understand any pitfalls and that you are giving yourself the best chance of achieving a financial settlement that will meet your needs.
What documents do I need?
As well as detailing your finances and assets on a Form E, you will need to provide supporting documents. These include:
- Bank statements
- Mortgage statements
- Payslips and P60 or your last tax returns if you are self-employed
- Pension statements for divorce purposes (CEV, also known as a CE)
- Records of any savings or investments
- Accounts for any business you are involved with as either a director or shareholder
- Details of any car/s you own
- Property valuations
- Details of any liabilities including money owed to friends or family
- Information about any inheritance you have received or are going to receive
Why is financial disclosure important?
Having full and frank financial disclosure helps you to make an informed decision about how to divide your resources on divorce. It will help your solicitor to establish how the resources you have could be applied to meet your needs and to make sure that their legal advice is tailored accordingly. Exchanging disclosure helps to ensure both parties have a full understanding of each other’s financial position so that there are no ‘surprises’ further down the line and so that you can reach a fair settlement.
If couples cannot decide on the division of finances and assets between themselves and an application to court becomes necessary, the judge will refer to the financial disclosure to inform their assessment of your case.
Can I refuse to disclose my finances during divorce?
You have a duty by law to provide full and frank disclosure, so it is important to disclose everything on the Form E. If you fail to disclose something, your financial settlement could be at risk of being legally challenged further down the line.
If the court finds that you have failed to fully disclose your assets, you may be found in contempt of court and you could be liable to pay a hefty fine or, in exceptional cases, receive a prison sentence.
Get in touch with our divorce finance solicitors
In most cases, our divorce lawyers can help you to agree on a divorce settlement voluntarily, without the need to involve the family court. If a collaborative approach isn’t possible, we can go to court to protect your position and ensure the best outcome for you.