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Changes to financial disclosure in divorce on the way

In the last 12 months, some high profile divorce cases have hit the headlines with the wives accusing their husbands of ‘hiding' their money so that their financial settlements are much less than they should be.
These cases have prompted a review about how ‘financial planning' in divorce can be minimised so that everyone gets what they are entitled to.

Financial planning is currently possible due to limitations in the regulations that have been in place in England for many years. These regulations mean that financial records required during a divorce only need to be provided for the period of twelve months. As a result, ‘divorce planning' can take place whereby assets can be moved outside the UK, or hidden in other ways, and then divorce filed twelve months later.

Other aspects of divorce planning could include:

Ploughing money into the business or introducing staff bonuses, which immediately affect the profits
Producing largely invented debts or loans
Giving away funds to people who will return them after the divorce settlement

All these meant that a divorcing party could plan the financial settlement in their divorce, to get a more favourable outcome.

The proposed reform suggests:

A disclosure period of two years instead of one
A significant financial penalty for manipulating or failing to disclose the full value of material matrimonial assets
Full disclosure of any paperwork connected with tax planning

The major difficulty with this is that, in the vast majority of average cases, there has been no such planning or moving of money, and the level of disclosure and the documentation required can be burdensome and cause unnecessary additional costs and delay. Therefore, it is important to achieve a balance between the two scenarios, with in-built flexibility and a common sense approach in the regulations.

If you need advice about a financial settlement in a divorce, give us a call on 01302 320621. We are family lawyers and have been providing legal help and advice on family law for over 30 years and as such, can give you the professional help you need at this difficult time.

Get in touch today