In recent family law, the issue of undisclosed assets in divorce proceedings has been under significant scrutiny, with courts emphasising the necessity for full and frank financial disclosure from both parties.
Recent reports* indicate a rise in financial secrecy within relationships. A survey revealed that over 25% of Britons in long-term relationships hide savings or investments from their partners, with 23% suspecting their partner does the same. This trend emphasises the importance of transparency, as hidden finances often come to light during divorces, leading to legal battles over undisclosed assets.
A notable case illustrating this is Copinger-Symes v. Copinger-Symes, where Maria-Christina Copinger-Symes successfully challenged a previous divorce settlement.
Maria-Christina Copinger-Symes, previously the band INXS’s manager, discovered that her ex-husband, James Copinger-Symes, had received a £27.6 million gift from her parents, which was not disclosed during the original proceedings. Judge Edward Hess ruled that this non-disclosure warranted a reassessment of the financial settlement, highlighting the courts' commitment to ensuring transparency and fairness in divorce cases.
This case emphasises the legal principle that any significant non-disclosure can lead to the setting aside of a final order, as the integrity of financial agreements in divorce relies heavily on both parties providing complete and honest disclosure of their assets. The courts have consistently demonstrated a willingness to revisit settlements where one party has concealed assets, ensuring that the division of assets is conducted equitably.
What exactly are Undisclosed Assets?
Undisclosed assets refer to financial resources or property that one party deliberately or unintentionally fails to reveal during legal or financial proceedings, such as divorce settlements, bankruptcy cases, or tax assessments. These assets may be hidden to avoid sharing them with a spouse, creditors, or tax authorities.
Types of Undisclosed Assets:
Why Are Undisclosed Assets a Concern?
How Are Undisclosed Assets Discovered?
Failing to disclose assets can have serious legal and financial consequences. Courts can impose penalties, overturn settlements, or order compensation if hidden assets are later discovered. Therefore, honesty and full transparency are essential in legal and financial matters.
Undisclosed Assets in Divorce
During divorce proceedings, both spouses are legally required to provide full and honest disclosure of their financial resources. This includes declaring all sources of income, capital, and liabilities. In some cases, it may also be necessary to obtain valuations for property, businesses, or pensions. A complete and transparent financial disclosure helps ensure that matrimonial assets are divided fairly and reasonably.
The disclosure process involves exchanging a Form E financial statement, which must be signed with a statement of truth. This document includes a warning that making false statements may result in contempt of court proceedings. Despite these legal safeguards, cases of hidden assets being uncovered well after the exchange of Form E are not uncommon. In some instances, the undisclosed sums are substantial. The most common explanation given for non-disclosure is that the asset was simply "overlooked"—an excuse that becomes less credible as the value of the asset increases.
Typical examples of undisclosed assets in divorce proceedings include:
There are several ways to identify hidden assets, such as conducting Companies House searches or Land Registry checks. For example, in a recent case, a Land Registry search revealed the existence of additional properties worth millions that had not been disclosed. Carefully reviewing financial disclosure documents and investigating any inconsistencies is essential to ensuring a fair settlement.
The UK legal system continues to emphasise the necessity of full financial disclosure in divorce proceedings. Deliberate nondisclosure not only jeopardises fair settlements but also carries significant legal repercussions. As societal trends reveal increasing financial secrecy, it's essential for individuals to approach divorce with honesty and transparency to ensure just outcomes
Lindsey Arnold (Partner, Poole head office) is a highly experienced family lawyer who specialises in matters including divorce, dissolution of civil partnerships, separation, financial remedy proceedings, complex family law cases involving children, cohabitation agreements, adoption, pre/post-nuptial agreements, jurisdictional issues and family injunctions.
*source : Financial Times