Although at the time you might feel like you want to keep some of your assets out of the financial process of a divorce, it is not recommended that you seek to hide those.
If you wish to ringfence assets, discuss this with your lawyer. There may be legal arguments why some assets can be ringfenced and this approach is better than trying to hide them.
The process requires ‘full and frank financial disclosure’. This is a legal requirement.
Usually, if one of you tries to hide an asset, you will be found out. The court process means you need to provide documentary evidence regarding your financial circumstances and there is often a paper trial which your spouse’s lawyer can investigate further and ask questions upon.
Moving assets and money prior to divorce
You may consider moving your assets around prior to the divorce to protect them from being part of the financial division. However, the Court can still treat that asset as a marital asset even though it may no longer be in your name.
Any attempt to hide or transfer assets in matrimonial proceedings are unlikely to benefit the person transferring the assets and your spouse could look to raise a conduct argument against you for which the Court can take into account when dividing the other assets.
If it is anticipated that you are hiding assets your spouse can apply to the Court for a freezing order to restrain a party from disposing or dealing with assets. Costs can be sought from you if such an application is made.
If you spend money on chattels (personal possessions) you will need to declare the same on your Form E and it will still be deemed an asset.
What about if I sell my assets before the divorce is filed?
If you disposing of assets knowing that you are separating or that divorce proceedings are imminent the same rules apply.
Can I create a trust to keep the money from the settlement?
If your spouse or their lawyer believes that the Trust is a sham created to avoid it being included within the divorce they will seek to argue that the assets transferred to the trustees still belong to you so are available for the purposes of the divorce. If a trust is held to be a shame, it will usually be void with the trust assets reverting back to your ownership. It is therefore important if you are thinking of setting up a trust that you take legal advice before doing so.
Can I protect my pension?
Pensions must be considered in divorce proceedings. Both of you will need to provide for yourselves in retirement. Pensions are part of your marital assets, whether they belong to you or your spouse.
It will be necessary for both of you to obtain the cash equivalent transfer value (CETV) of your own pension funds. You are entitled to one free CETV each year. Once the values have been obtained, your lawyer can consider matters further, including whether there is a need for expert evidence from an actuary on how pensions should be divided.
What happens if I do hide assets and I’m found out?
When producing information to the court by way of a Form E you will need to read the warnings and sign the form to say you understand those. Essentially you are saying that you understand your duty to the Court in providing full and frank disclosure and that if you are found to have been deliberately untruthful criminal proceedings may be brought for fraud.
Your spouse may also seek an adjustment in their favour and seek costs from you.
What if I believe my partner is hiding assets?
You should talk to your family lawyer to agree what to do. They will go through the assets with you and assist you in preparing a questionnaire to seek further information. If that remains outstanding they can prepare a schedule of deficiencies and ask the Court to draw inferences. Other professionals can also be instructed if necessary.
You need to tread carefully when it comes to doing your own investigations as this can be a minefield. For more information please read our blog post ‘ Should you be snooping through your partner’s confidential documents?’
Our divorce and finance lawyers can support you if you have assets that you want to protect or if you think that your partner may be hiding assets. Get in touch using the form below or call 01392 421777.
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