If you are divorcing from your spouse and thinking about how to divide your assets/finances, it is important to first go through the process of exchanging full financial disclosure.
Financial disclosure – what does it mean and when do I have to do it?
It is generally advisable to attempt to do that voluntarily in the first instance and then to use that information to negotiate via alternative dispute resolution (i.e. outside of Court) but if a court process is started/necessary, financial disclosure will be the first step.
Financial disclosure essentially means the disclosure of information and documents in relation to your personal finances and will often include the following (not intended to be an exhaustive list):
- Details of any properties that you own (jointly and/or separately);
- Bank statements for all bank accounts covering the last 12-month period;
- Statements confirming the current value of any investments;
- Evidence of any liabilities (such as credit cards or loans);
- Evidence of any capital gains tax liability (the Court always wants to know the net value of your assets i.e. what you would have in your hands if the assets were sold);
- Where you own or have an interest in a company, detailed accounts should be provided;
- Statements confirming the cash equivalent value (CEV) of any pension assets;
- Evidence of income from all sources (generally this should be evidenced by three months’ worth of payslips and a P60 for the last financial year).
Why is financial disclosure important?
Exchanging financial disclosure with your spouse is important because it will enable you to negotiate on an informed basis – you and your solicitor will need to know the extent of your respective resources to determine what sort of financial settlement is likely to be fair and achievable.
In financial remedy proceedings, the Court imposes a duty on the parties to provide full and frank disclosure and that duty is ongoing throughout the entire process – that means the financial disclosure exchanged at the start will need to be updated as the case progresses. Parties should be encouraged to follow that duty whether negotiations take place during the Court process or not, as transparency and openness help to promote effective negotiations.
How does it work?
It is generally advisable to use the Court form (called a Form E) when preparing and exchanging financial disclosure. It is comprehensive and will ensure that nothing is missed or forgotten about. The Form E and guidance notes can be downloaded from the Gov.uk website here.
The financial disclosure process can often feel labour intensive, but it is essential to do this in the early stages as you will then have all the information you need to start negotiating with your spouse. If you need help and support with this, please contact our Family law team.