Completing a financial statement, otherwise known as a Form E, is the way that most couples provide full and frank financial disclosure during the divorce process.
In addition to fully completing this document, one of the requirements of Form E is that each individual has to provide details of all bank accounts held over the previous 12 months. You have to provide information including:
- Bank or building society name (includes National Savings)
- The type of account
- Your sort code and account number
- The name of the account holder (you must include joint accounts)
- The current balance of the account.
In addition to this, you have to also provide 12 months’ bank statements for each account. This is not just for your main account, but for all accounts in your name (or joint name).
Providing some statements or partial information is insufficient: you must supply a full year’s statements for each account.
What is the role of bank statements in divorce proceedings?
Bank statements are essential documents in divorce proceedings as they provide an in-depth view of each party’s financial situation. They reveal spending habits, income, and transfers that may point to hidden assets or unreported financial activities. Reviewing these statements helps ensure transparency in financial disclosures, aiding fair settlements. Discrepancies, such as unexplained large payments or transfers, could suggest attempts to hide wealth or income, prompting further investigation. Failing to provide complete or accurate bank statements may result in legal consequences, including adverse court inferences or even contempt charges.
What happens if I don’t provide bank statements?
Honest disclosure is a key element when you seek to reach a financial settlement on divorce. Your solicitors, the other party, and the Court need to see the entire picture in order to make a fair decision.
If you do not provide the bank statements that are requested, adverse inference may be given. This may be wrong and you may simply have not provided the right statements. It is not worth the risk to exclude any information, deliberately or otherwise.
If you refuse to divulge your financial information to your spouse, then they can make an application to the court which can order you to provide your financial information within a certain time limit. If you still fail to provide bank statements, etc then you can be found in contempt of court. In this instance the punishment can be a fine or even a prison sentence.
A case in 2017 saw a husband described by a judge as a ‘serial non-discloser’. His failure to provide supporting documents resulted in a judgement that awarded the wife more than 55% of the total assets.
Two appeals to the Supreme Court in 2015 also considered the issue of non-disclosure. In both cases, one party had deliberately failed to disclose some of their financial information during the initial divorce proceedings. Once this non-disclosure become apparent, both the other parties were then able to set aside the original settlement.
These cases underline the principle that both parties in a divorce have an ongoing duty to provide bank statements and any other financial information that is required.
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What are solicitors looking for when they review bank statements?
There are many reasons that bank statements are a key part of disclosure during the divorce process. When reviewing these statements, a solicitor is generally looking for:
- Evidence that the expenditure matches that which has been declared on the Form E
- Transfers to other bank accounts that don’t appear on the Form E
- Large payments out of the account that cannot be explained. These may also suggest that money is being deliberately transferred to another party to exclude it from the divorce settlement
- Large payments, which do not seem to come from sources detailed on the Form E. Are these bonuses or commissions? Or dividends from non-disclosed investments?
If these statements highlight any suspicious activity, a solicitor may ask for further evidence or request additional bank statements.
What are the legal obligations for financial disclosure?
During divorce proceedings, both parties are legally obligated to provide full financial disclosure to ensure a fair and just settlement. This involves sharing all relevant documents such as bank statements, tax returns, property holdings, and details of any debts or investments. The objective is to avoid dishonesty, concealment of assets, and any attempt to mislead the court. Financial transparency helps both parties fully understand each other’s economic situation, which is essential for the equitable division of assets. It also ensures that there is no suspicion of financial misconduct or unfair advantage, promoting a smoother and more balanced divorce process. Non-disclosure can result in serious consequences, including court sanctions and an unfavourable division of assets.
Along with bank statements, what other documents will I have to provide?
As we have seen, you are required to provide 12 months’ bank statements for every account you hold.
In addition to these statements, there may be other documents you have to provide as part of the financial disclosure process. These include:
- Details of any property you own, including a valuation that is no more than six months old (if you have one). If you don’t, you may have to provide market value estimates from several estate agents
- A recent mortgage statement for any property on which you have a mortgage
- A valuation of your pension. This is typically a Cash Equivalent Transfer Value (CETV) figure, dated within the last 12 months. If you do not have such a valuation you will need to obtain one in good time as this can take weeks or months to be produced by your pension provider
- Proof of income. This will be your last three wage slips and your most recent P60 if you are employed. If you are self-employed you will have to supply a copy of your tax returns for each of the last two years
- Business accounts. If you are a sole trader, partner or a shareholder in a business you will have to provide accounts for the last two years.
What are the consequences of non-disclosure?
Failure to disclose financial information during divorce proceedings can lead to severe legal consequences. The court relies on full transparency to ensure fair settlements, and non-disclosure can result in adverse inferences, where the court may assume the withheld information would have been detrimental to the concealing party.
If hidden assets or income are discovered later, the offending party could face financial penalties, including having to pay the other party’s legal costs. In more serious cases, failing to disclose can lead to contempt of court charges, which can result in fines or imprisonment. In addition to legal consequences, non-disclosure can also harm the credibility of the offending party, making it harder to negotiate or achieve a favourable outcome. To avoid these repercussions, both parties must ensure they provide complete and accurate financial information, including bank statements, throughout the divorce process.
How do I make sure accurate financial disclosure occurs?
To ensure accurate financial disclosure in divorce proceedings, you should start by thoroughly organising all financial documents, including bank statements, tax returns, property records, and investment details. This helps present a clear and complete financial picture. Consider consulting a financial advisor to identify and value assets, liabilities, and income streams. They can provide guidance on complex financial matters, ensuring that nothing is overlooked. It is essential to maintain detailed records of all financial activities, such as purchases, transfers, and debts, to avoid discrepancies. Transparency is key—be proactive in revealing all assets, even those that may seem difficult to disclose. Avoid any attempts at concealing financial information, as non-disclosure can lead to legal consequences.
Case studies highlighting the importance of financial disclosure
Case studies emphasising the significance of financial disclosure during divorce proceedings highlight how crucial transparency is for an equitable settlement. In one case, a wife noticed irregular transactions in her husband’s bank statements, leading her to suspect hidden income from a side business. Upon further investigation, it was revealed he had been under-reporting his earnings for years. When confronted, he attempted to justify the omission but ultimately had to disclose the full extent of his financial situation, leading to a more favourable settlement for his wife. The court took the non-disclosure seriously, resulting in the husband being ordered to pay additional compensation.
In another case, a husband failed to disclose offshore accounts that held significant assets. The wife only discovered these hidden assets after her solicitor requested more detailed financial documentation. The court viewed his failure to disclose as an attempt to defraud his spouse, leading to an increase in the division of assets, as well as additional legal fees being awarded to the wife. This situation illustrates how non-disclosure can result in not only an unfair division of assets, but also lasting legal and financial consequences.
These cases show the importance of full financial transparency. As stated above, bank statements are often key in uncovering hidden assets or income. By failing to disclose financial information fully, individuals risk severe penalties, including financial penalties, adverse inferences, and even contempt of court charges. This makes it essential for both parties to provide honest and complete financial records to avoid legal repercussions and ensure a fair settlement.
The importance of providing full and frank disclosure
Financial disclosure during divorce is not only a legal obligation but also an essential element for a fair and efficient process. Each party must provide a detailed and accurate picture of their financial situation, including income, assets, debts, and liabilities. This transparency allows the court to ensure that all resources are accounted for, preventing one party from manipulating the division of assets. Without complete disclosure, it is difficult to assess whether a fair settlement can be reached, as hidden assets may give one party an unjust advantage.
Moreover, full disclosure ensures that both parties are aware of the financial context, enabling them to make informed decisions regarding settlements and child support. It also prevents future disputes, as both sides can refer back to the disclosed information to address any issues that arise post-divorce. Non-disclosure can cause significant delays in the legal process, increasing the costs for both parties.
In some cases, failing to meet financial disclosure requirements can result in the court making adverse inferences, such as assuming that any undisclosed assets are being hidden intentionally. If serious concealment is found, the court may decide to redistribute assets, award additional financial compensation, or even hold the non-disclosing party in contempt of court. Ensuring full transparency early in the process helps avoid these consequences and fosters a more amicable resolution.
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