Hiding Money in a Divorce and the Penalty

Even though hiding money in a divorce can have serious consequences and can result in a penalty, there are those who are willing to take that risk. Divorce financial settlement negotiations can only really begin once both parties have fully disclosed their assets and finances to each other.

While the vast majority of people do reveal the full extent of their financial situation to their spouse in order to work towards a settlement which is fair to both sides, this is not always the case. We look closer at what to do if someone is hiding money in a divorce and what the penalty for hiding assets in a divorce would be.

Hiding money in a divorce

During divorce proceedings, both parties are expected to make full and frank disclosure of their finances. Hiding money in a divorce goes directly against this principle.

Both parties being open and honest about their financial situation can help to ensure that negotiations are effective and increase the chance of reaching a solution without the expense of having to go to court. If one party is hiding money in a divorce, this could result in negotiations breaking down and court being the only option.

If this happens, both parties will be ordered by the court to fully disclose their finances and assets.

Full and frank disclosure using a Form E

A Form E is a detailed document which is used to set out information about the financial position of both spouses. Courts require a Form E if you make an application regarding financial matters as a result of divorce. However, many divorce solicitors will ask you to fill this in, even if you are not intending to involve the courts, as it ensures that each party is providing the same level of detail about their finances.

Questions on this form cover everything from assets to income and debt.

What can I do if I think my spouse is hiding money in a divorce?

In financial remedy proceedings, both parties have a duty of full and frank disclosure of their finances and assets.

If the court believes that one party is hiding money in a divorce, there are a number of different remedies the court has available to it. For example, if your spouse is hiding money in a divorce, the court may make a court order on the basis that a certain amount of money is available, despite what your spouse has chosen to reveal.

If you think your spouse is hiding money in a divorce, you must raise your concerns with your solicitor as early on as possible in the process so they can take the necessary action. The sooner you seek legal advice about your spouse hiding money, the better.

If a case is closed and the court later discovers that someone was hiding money in a divorce, the case could be reopened, and the financial order could potentially be changed.

What is the penalty for hiding assets in divorce in the UK?

The only way to ensure that every couple has a divorce financial settlement which is fair to both parties is to ensure that each party fully discloses their assets and finances as part of the financial settlement negotiations. This is known as full and frank disclosure. The penalty for hiding assets in divorce in the UK will depend on what is appropriate in each case.

If your spouse is found to be hiding money in a divorce, the court could punish them in a number of different ways. One penalty is being ordered to pay the legal costs of the other party. The person hiding the assets may also receive a less favourable financial settlement than they would have been awarded otherwise.

As well as the penalty for hiding assets in divorce in the UK, the court also has the power to ensure the assets are included in the financial settlement.

In addition, if the court discovers at a future date that one party did not disclose all of their assets, it has the power to reopen the case and make changes to the original financial order.

What’s more, the penalty for hiding could include the ‘guilty’ party ending up with a criminal record and maybe even a prison sentence.

Penalty for hiding assets in divorce: It’s important to act quickly

There are various different penalties for hiding assets in divorce, and if the court finds that one party has concealed assets, it will decide on a punishment which it considers adequate in the circumstances (more on this below).

It is vital to seek advice from a solicitor as quickly as possible if you suspect that your spouse may be concealing assets from you or organising the disposal of assets.

A solicitor will be able to tell you what steps you should take to stop your spouse disposing of assets. They’ll also be able to ensure that the assets your spouse is attempting to hide are taken into account by the court when it is making a financial order. 

What can the courts do to stop the assets being hidden?

There are various provisions that courts can use under the Matrimonial Causes Act 1973 in order to stop your spouse transferring assets, or to order assets to be transferred back if they have already been transferred. 

When looking for hidden funds the court has the power to:

• Use a search order to discover whether there are hidden assets (this only tends to apply when the assets are significant, as search orders can be expensive).
• Make a freezing order to prevent assets being disposed of.
• Order that already-disposed assets be transferred back.

Can I gather evidence that my spouse is hiding assets?

Yes – you are able to gather evidence, but only within the confines of the law. It is important that you go about collecting the information in the right way and avoid inadvertently committing a criminal offence which could result in you going to prison. You need to also be aware of any relevant civil laws so you don’t end up being sued for damage.

Many of the methods you would need to undertake to find out if your spouse is hiding money in a divorce, such as hacking into your spouse’s email account or breaking into their filing cabinet, are illegal. By trying to investigate yourself, you could find yourself at risk of both criminal and civil sanctions.

Before you start gathering evidence of your spouse’s hidden assets it’s a good idea to get legal advice to make sure you don’t fall foul of any criminal or civil laws. You may also want to employ a forensic accountant to ensure smooth divorce proceedings.

Can I open my spouse’s letters in order to find evidence of hidden assets?

Opening your spouse’s letters could be a criminal offence and is not advisable. This also goes for checking their email – and indeed their computer – without their permission.

FAQs

Cryptocurrencies: Are they a new way of hiding divorce assets? 

Cryptocurrencies, such as Bitcoin, could potentially be used to keep assets hidden from a spouse.

As cryptocurrencies are, by their very nature, virtual, there are no real bank accounts to disclose to a spouse upon divorce. Cryptocurrencies are normally kept in a virtual wallet, and the anonymity that these currencies allow may be attractive for those who are wanting to hide money.

Our divorce has been finalised and I’ve since discovered my spouse was hiding assets – is it too late to do anything?

No. If your spouse was hiding assets during your divorce and you’ve only just found out then the case can be reopened and a new financial order made. This applies even if your divorce has already gone through.

The courts place a huge amount of importance on full, open and honest financial disclosure during the divorce process and take any attempt to hide assets very seriously. If you suspect that your spouse may be trying to hide assets then it is important that you speak to a specialist solicitor as soon as possible so that any necessary action can be taken.

For more information on this subject please visit our Legal Library.

Is it possible to reach an agreement outside of court?

If possible, it is usually recommended that divorcing couples reach an agreement regarding the financial settlement without going to court. This is because the court process can be both lengthy and costly.

Some couples are able to reach an agreement between themselves. Indeed, it is perfectly possible to decide on a financial settlement without advice from a solicitor.  However, it is highly recommended that legal advice is sought, so that you have a good idea of what may be considered a fair and reasonable division of your finances, in your situation.

Other couples may consider various methods to help them to reach an agreement, such as collaborative law (this involves four-way meetings between you, your spouse and your respective solicitors) or mediation.

If you do reach an agreement outside of court, it is usually recommended that a court order called a consent order is obtained, so that your agreement can be made legally binding.

How can our expert divorce solicitors help you with your fair divorce settlement?

Our expert family law solicitors can help you with a range of legal issues relating to fair divorce settlements, including:

• Prenuptial agreements
• Cohabitation agreements
• Post civil partnership agreements
• Divorce
• Domestic violence and harassment
• Child maintenance
• Child contact arrangements
• Divorce financial provisions

Contact our expert divorce solicitors for advice 

For more information, call our divorce solicitors on 0845 862 5001 or email mail@austinkemp.co.uk

View our offices below:

• Leeds Office: St Andrew House, The Headrow, Leeds, LS1 5JW
• Wakefield Office: Market Walk, Wakefield, WF1 1QR
• Halifax Office: Old Lane, Halifax, HX3 5WP
• Huddersfield Office: Northumberland Street Huddersfield, HD1 1RL
• Coventry Office: Warwick Road, Coventry, CV1 2DY
• Canary Wharf Office: 25 Canada Square, Canary Wharf, London, E14 5LB

Please contact us for more details.

More articles you may be interested in:

• Mesher Orders – How is a house divided in a divorce?
• What is a common law partner/wife and what are the rights?
• No-Fault Divorce UK – Guide
• How long does a divorce take?
• How to Protect Finances During Divorce
• Dividing assets in divorce: A complete guide to who gets what
• Limited companies and divorce