One of the biggest considerations during a divorce settlement is how to divide up the assets. If you have a pre-nuptial agreement, this may be used for guidance.
Here are some frequently asked questions about assets in divorce.
Do I have to disclose all of my assets?
Yes. For the Family Court to approve a financial order – which is used to identify how assets will be distributed in the event of a divorce – it must be satisfied that each spouse has provided a ‘full and frank disclosure’ of their financial and other relevant assets to the other spouse and the court. This will ensure that the settlement is fair and reasonable. This disclosure also includes assets which you do not legally own, but have a beneficial interest and/or enjoy the use of.
Failure to co-operate and provide a full disclosure can result in severe consequences. If one of you is found to have hidden an asset, the court will take this very seriously. The person doing it can be penalised, for example by being ordered to pay the other side’s legal costs or by being given a less favourable settlement.
In worst case scenarios, dishonest parties could find themselves with a previous order being retracted or criminal proceedings being brought against them.
Do I have to disclose foreign bank accounts?
Yes. ‘full and frank disclosure’ includes assets and income held or received under any law of courts or jurisdiction.
Will a Trust protect my assets?
This depends on the nature of the trust. You must disclose any trust arrangements within your disclosure from which you benefit / are relevant to your financial circumstances.
If a trust is considered by the Family Court to be a “nuptial agreement”, ie it benefits one or both parties or their children, the trustees can be ordered to alter the terms of this trust to benefit either spouse and/or their children.
Even if the trust has a foreign trustee(s) this is not enough to stop the English Court from implementing the order.
A trust may protect your assets in the event of a divorce if it meets a number of criteria. For example, if the trust was set up some time before the marriage, if members of the family did not benefit from the trust throughout the marriage, and/or if the trust was not set up to fund the lifestyle of both spouses during the marriage as stated in any letters of wishes.
What if assets are in my name?
Even if the assets are in your name, the Family Court has powers in the event of a divorce to ensure a fair and reasonable division of assets, taking into consideration the needs of both parties and any children.
For example, if the family home is owned solely by the working husband, and it is agreed that, following the divorce, the child(ren) will live with the wife, who is unemployed, the Family Court may order a transfer of the asset to the wife, taking other circumstances of the divorce into consideration.
Will my off-shore assets be protected?
If you move your assets off-shore during a divorce, the Family Court will view this as intent to deceive, and can implement an order to reverse any such transfers.
In essence, your assets will not be protected if you move them off-shore – this can work to your disadvantage if you’re found to be doing so during divorce.
This article was written by Boodle Hatfield who provide high net worth divorce services in the UK.
DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances, and is merely a general comment on the relevant topic. If specific advice is required in connection with any of the matters covered in this article, please speak to Boodle Hatfield directly.
Published on 31st October 2018
(Last updated 1st November 2018)