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Divorcing Couples Hiding Assets

Wednesday, 6 March 2013

During a divorce, each spouse is legally required to fully disclose assets to the court for consideration in financial resolution of the separation. Property and assets acquired before and during the marriage can all be subject to pooling and division.

The divorce rate in England and Wales hovers around 40%, up to 120,000 divorces per year, and in a survey of 800 couples conducted for The Co-operative Legal Services by Onepoll, almost a quarter of divorcees admitted they had hidden financial assets in order to withhold funds from their spouse. Assets are most commonly concealed through transfers or loans to relatives, fictionalizing debt, overspending on a joint credit card, withdrawing all money from joint accounts, or hoarding cash assets.

Penalties for Hiding Assets in Divorce

Penalties for hiding assets from the court range from an increased award to the truthful spouse, fines, contempt of court, and even jail time. Despite potential for harsh consequences, failure to disclose has become increasingly more prominent in recent years, and the high number of spouses hiding assets from a partner is likely the result of an inconsistent and low rate of enforcement by the court.

The Onepoll survey additionally indicated that the primary reason spouses hide assets is “revenge” and that women are either more likely to hide assets or are more likely to admit to hiding assets. Due to the contentious nature of many divorces and the low potential for punishment for hiding assets, there appears to be something of a financial incentive to mislead the courts.

Changing Attitudes of the Courts

Recent court decisions indicate a changing attitude towards divorcees who fail to fully disclose or wilfully conceal assets. They are now enforcing serious penalties on spouses who perpetrate this type of fraud on the court. Two recent cases have resulted in substantial jail sentences for contempt of court, due to failure to disclose: a British businessman was sentenced to two years in jail and a property tycoon was sentenced to six months in jail.

Conclusion

If a spouse in a divorce proceeding believes that the other spouse is concealing assets or being untruthful about finances, the spouse should not engage in self-help, such as seeking out and photocopying financial documents of the partner, because illegally or improperly obtaining documents can result in exclusion from the proceedings. The spouse should request a court order to compel disclosure to resolve the failure to disclose. Failing to disclose assets can have a serious impact on the financial outcome of the divorce, and it is crucial that each spouse accurately represent all financial assets to the court.

If you would like to discuss divorce or issues related to divorce or you need advice in relation to other family law issues, Rollingsons has experienced solicitors who can advise you; please contact Jeetesh Patel via email JPatel@rollingsons.co.uk or by telephone on 0207 611 4848.

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