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Tackling financial disclosures

Sep 29, 2018, 21:33 PM
Finance, disclosure, divorce, family law, Jo Carr-West, mediation, dispute resolution
Gathering together the financial documents needed to provide full financial disclosure on divorce is a daunting procedure, whether you are using mediation, negotiating via solicitors or going through the court process to work out a financial settlement.
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Date : May 3, 2016, 07:17 AM
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Gathering together the financial documents needed to provide full financial disclosure on divorce is a daunting procedure, whether you are using mediation, negotiating via solicitors or going through the court process to work out a financial settlement. It is always sensible to be as comprehensive as possible, which will ultimately avoid both time and money being spent on providing additional information later on. This can, however, make the task seem even more overwhelming - so how can parties break this down and make it more manageable?

1. Start early

As discussed in my January article on tips for making the separation process easier, it is sensible to start early so that you can work out what information you have to hand and what information you are going to need to obtain from third parties. It can often take time to obtain information about, for example, occupational pension schemes or your state pension entitlement, so put these requests for information near the top of your list and tick them off at an early stage.

It is sensible to think about the nature of your assets and your income, and work out exactly what documentation you might need to provide in order to give clarity.

2. What information are you going to need to provide about your assets?

In essence, each party is trying to give an up-to-date picture of their resources  by providing documents to establish the value of their assets and to evidence their income.
The Form E has a comprehensive list of the relevant documents to accompany it, and guidance at each question about the documentation to be provided in response to each part. Read it through thoroughly and cross-reference with the documentation you have. A good starting point is to make a list of all your bank accounts, including any that are dormant or that you have closed within the preceding 12 months. If you bank online, do you still receive paper statements and, if so, can you put together a run of 12 months? If there are some missing or you do not have hard copies, can these be printed from your online account or do you need to request them from the bank? Don't forget to include joint accounts, either shared with your spouse or with other people?

Once you have got on top of the bank statements, think about the other types of accounts you might have: for example, ISAs, Premium Bonds, National Savings, etc. Do you have statements or paperwork for these? What other assets do you have? Are there insurance policies or investments that you need to provide valuations for?

As well as your assets, think about your liabilities. While the Form E does not strictly require you to provide evidence of these, it is sensible to provide credit card statements or loan agreements if you are including these as liabilities. You also need to estimate any capital gains tax that might be payable on assets if they are realised or sold.

If you own your own business, you will need to provide up-to-date accounts. A combination of statutory accounts and up-to-date management accounts is likely to provide the clearest picture of what is going on with the business.

Trust beneficiaries might want to consider providing copies of any relevant trust documentation that they might have available and which help to establish the nature of their interest.

3. What information do you need to provide about your income?

Make a list of all your sources of income, including self-employment, employment benefits or third parties. Consider what documentation provides the most accurate and up-to-date information on these. You are required to provide tax returns (if you have them) as well as your last three payslips and P60. If you do not have these, check how you can get hold of replacements.

4. What information can your solicitor help with?

One of the most difficult tasks that people face when completing their financial disclosure is producing a comprehensive list of their income needs, which is one of the key documents for resolving the majority of cases.

The Form E provides a useful template, and taking the time to go through this carefully will be important. It can often be helpful to complete this schedule over a period of weeks, factoring in some time to revisit it after completing an initial draft. Your solicitor can help you check whether the list is realistic and whether you have forgotten to include significant items of expenditure. They can also advise you on how to analyse and present your capital needs. For example, if it likely that your current property might need to be sold, you will need to think about the costs involved in moving (including Stamp Duty Land Tax and legal fees), as well as the cost of a replacement property.

5. What information do you need to look for in your spouse's disclosure?

Once you have completed your own disclosure, it is prudent to give some thought to what you might expect to receive in return and what documents are going to be useful for you to see to understand the financial picture fully.

It is always tempting to review the other party's bank statements in detail and to query unexpected spending habits. However, unless this sheds light on something unusual that needs to be clarified, it may not be necessary or proportionate to focus on this aspect of their disclosure. Focusing on the questions that you need to answer and checking that you have the documents to do this is a sensible first step. Do you have evidence of your spouse's income through payslips, their P60 and their tax returns? Does this include all the details you need, for example details of a bonus that they might have received?

Your solicitor can help you to review the information, whichever route you are taking to dispute resolution, so that you can ask for any additional documents that might be required to ensure that financial disclosure is complete and that everyone is in a position to move to a discussion of settlement options.
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