Dishonest divorcees: five ways to uncover hidden assets in a divorce
Sarah Evans, Partner in Coodes Solicitors’ Family team, highlights the seriousness of hiding assets in a divorce and outlines some of the steps you could take to uncover money or valuable items you suspect your spouse keeping secret.
When separating out finances during the divorce process, some people may be tempted to try to hide valuable assets from their spouse. These could range from high end luxury items, such as jewellery, to finances held in shares or offshore bank accounts.
At Coodes we seem to be dealing with this issue more frequently during divorce proceedings. I cannot emphasise enough how serious it is to try to keep assets secret. The divorce courts demand full and frank disclosure and will deal with any dishonesty extremely seriously. In 2013, following a High Court hearing, entrepreneur Scott Young was imprisoned for six months for attempting to hide £45million held in offshore trusts during his divorce.
In most cases, spouses are open about their assets so that a fair settlement can be reached. However, if you believe your husband or wife is trying to keep assets secret from you there are steps you can take.
1. Ask your solicitor for an order for non-party disclosure
When our clients have good reason to believe their spouse is hiding assets, we sometimes apply to the courts for an order for non-party disclosure. This enables us to obtain documents from banks and organisations such as the DLVA and HMRC.
The court will only provide an order for non-party disclosure if the documents in question are likely to support the case and disclosure is thought to be necessary to ensure a fair financial settlement.
2. Consider a search order
Sometimes called an Anton Piller Order or a search and seizure order, a search order is used far less frequently than an order for non-party disclosure.
Search orders are rare and involve a complex application process, but may be worth considering if you have evidence that your spouse is planning to destroy significant documents, which provide evidence of his or her assets. These could, for example, include share certificates. You would also need to prove that not having access to these documents would cause irreparable damage.
If your situation meets with these exceptional circumstances, you would need to appoint a specialist Supervising Solicitor to handle the search. This would then involve them entering the property to search for and retrieve the relevant documents.
3. Apply for a freezing order
A freezing order, or freezing injunction, is a court order that prevents an individual from disposing of or dissipating assets. These could include moving or investing money held in a bank account, property, shares or investments.
If you are concerned that someone is going to dispose of assets during the divorce process, a lawyer can help you apply for an injunction, which is sometimes called a freezing order.
The court will only agree to a freezing order in very specific cases, so this would need specialist handling from an experienced lawyer.
4. Request an Avoidance of Disposition Order
If a spouse or partner has already sold or moved an asset it is usually too late for a freezing order. If, for example, they have transferred money from a savings account to a third party, it may be worth considering applying to the court for a Section 37 Avoidance of Disposition Order.
A successful Avoidance of Disposition Order depends on you demonstrating that the asset in question was disposed of specifically in an attempt to defeat your legitimate claim to it. If an avoidance of disposition order is granted, the divorce settlement will continue as though the transfer had never taken place and the asset that your former spouse tried to dispose of can be included in your settlement.
5. Seek ‘add back’
An alternative is to consider something that is known in divorce cases as ‘add back’. If, for example, a partner has spent £100,000 in what could be defined as a ‘wanton or reckless’ manner, that £100,000 can be ‘added back’ to the pot and considered as part of the overall settlement. Examples of wanton or reckless spending includes gambling or buying excessive gifts of luxury items.
This can be a complicated process, so it is important to seek the expertise of a specialist lawyer at an early stage.
Those who do not respect the need to provide full and frank disclosure during their divorce can expect the courts to react very seriously indeed. If you do suspect your spouse is not being honest in disclosing his or her assets, speak to your solicitor for advice.
If you are affected by any of these issues and need legal advice, please contact the Family team: Family@coodes.co.uk