As a London divorce solicitor, I am asked questions about divorce financial disclosure. Some separating couples do not see the need for any financial disclosure. Other separating couples want financial paperwork going back to the early years of their relationship.
Who is right? Potentially, both approaches are correct. The amount of financial disclosure depends on individual circumstances. However, there is normally a minimum amount necessary to reach a binding financial agreement and to secure a financial court order.
Why do you need financial disclosure if you have a financial agreement?
It is often thought that if you reach a financial agreement with your husband or wife then that is an end to matters. It is not. All top London divorce solicitors will emphasise the need to get a financial court order from the divorce court. A financial court order is a binding legal document. It offers you financial protection.
It is then assumed that all you need to do to obtain a financial court order is to send a draft financial order to the court for a judge to rubber stamp. The best London divorce solicitors will tell you that is not right either.
A divorce court will only approve a financial court order if it is accompanied by a document called a financial statement of information.
Financial disclosure and the financial statement of information
If a couple reach a financial agreement and want a court to approve a financial court order, they have to fill in the financial statement. The document details:
• The husband and wife's ages; and
• The length of the marriage; and
• The number and ages of any children;
• The status of the husband and wife – have they remarried or are they cohabiting with a new partner or are they single;
• What the husband and wife's housing plans are and, if relevant, where will the children live; and
• How much equity in property they each have;
• How much they each have in savings and investments; and
• How much personal debt they have, for example, store cards; and
• The fund value of any pensions; and
• The value of any other significant assets, such as a business; and
• Their income; and
• Anything else of significance; and
• Confirmation that they have told relevant third parties about the financial court order, for example the pension administrator.
The financial statement of information is a standard document. It should be completed fully even if you do not think sections are particularly relevant to you. For example, a young couple who have only been married for two years may not have big pension funds and pension sharing orders will not be appropriate. Even so, pension fund values will still need to be included in the financial statement of information.
Why is a financial statement of information necessary?
The best London divorce solicitors will tell you that a financial statement of information is necessary, as court rules require it. Put bluntly, you will not be able to get a financial court order by agreement without filing the document at court together with the draft financial court order.
That is because a judge does not simply rubber stamp any financial agreement a husband or wife may make. The judge has to consider if they think that the draft of the financial court order is fair and reasonable to both the husband and wife. The judge cannot carry out that task without basic information about the husband and wife's personal and financial circumstances.
Does a judge have to see the supporting financial disclosure paperwork?
If a judge is asked to approve a financial court order, all they will want is:
• A draft financial court order; and
• A completed and signed financial statement of information;
• The court fee;
• Confirmation that decree nisi of divorce has been pronounced.
The judge therefore will not want to see supporting pension documents or bank statements or wage slips.
Do a husband and wife need to see the supporting financial disclosure paperwork?
The best London divorce solicitors always recommend that a husband and wife and their solicitors exchange financial disclosure before negotiating a financial agreement. The extent of the financial disclosure may depend on the couple’s circumstances. For example, if a couple have always operated a joint bank account together, and have both monitored the account expenditure, they may not see the need to exchange 12 months of joint bank account statements.
Do a husband and wife have to sign the financial statement of information?
A husband and wife do have to sign the financial statement of information to confirm that:
• The information that they have provided is accurate and honest; and
• That they have seen the information provided by their spouse in the financial statement of information.
Signature is important. Top London solicitors will warn husbands and wives that by signing the financial statement of information they are signing a legal document. It will be very difficult for either husband or wife to challenge an agreed financial court order on the basis that they did not know about their spouse’s finances if they both signed a financial statement of information.
What happens if the financial statement of information has incorrect information on it?
If a judge makes a financial court order based on incorrect information contained in a financial statement of information, the husband or wife might want to challenge the financial court order later. It is possible to do this if there was significant errors, omission, or fraud. It is a complex court application. If a judge over turns a financial court order that was based on incorrect information in the financial statement of information, there may be cost penalties. That is why it is vital that:
• You get expert legal advice from top London divorce and financial settlement solicitors before finalising your financial agreement; and
• You listen to advice about the extent of the financial disclosure needed in the particular circumstances of your case, for example, far more extensive paperwork may be needed if one spouse is a business owner or there are fears that assets have been hidden over the years; and
• You should not sign a financial statement of information unless you understand the contents of the document and know that the information is accurate. If it is not, it then it leaves you vulnerable to the financial court order being reopened, thus you will not have financial security.
How can OTS Solicitors help you?
If you want to negotiate a financial settlement with your spouse or have reached an agreement with them, directly or in mediation, then we can prepare your financial court order and financial statement of information for you.
OTS Solicitors advise on all aspects of divorce, financial settlement and family law. Our London family law team have extensive experience in negotiating financial settlements. Whatever your divorce and financial settlement questions, our divorce and financial settlement team at OTS Solicitors will work with you to help reach a financial agreement and secure a financial court order. Please get in touch with us on 0203 959 9123 to arrange an appointment to speak to one of our experienced divorce solicitors.
Posted on: Thursday, 20 December, 2018