Hidden Assets, Freezing Orders & Forensic Accounting Solicitors Berkhamsted, Amersham & Beaconsfield
Can my spouse hide assets during a divorce?
During divorce, in order for a fair financial settlement, parties need to ensure that each party fully discloses their assets and finances. This is known as full and frank disclosure. Your spouse may wish to conceal assets, however, there are sanctions for this.
What is the penalty for hiding assets during divorce?
The court can punish your spouse 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. The court also has the power to ensure the hidden assets are included in the financial settlement. The penalty for hiding assets could include a criminal record and maybe even a prison sentence.
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 can the courts do to stop the assets being hidden?
There are various provisions that courts can use 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 the already-disposed assets to be transferred back (Avoidance of Dispositions Order).
A Freezing Order (sometimes referred to as a Freezing Injunction) is an interim injunction granted by the Court restraining a party from disposing or dealing with assets.
Within divorce proceedings, it is most commonly utilised by a party to prevent the other party from frustrating the financial proceedings and attempting to hide and/or dissipate assets.
Assets that can be frozen include bank accounts, investments, private and public shares, property, land, and motor vehicles. Even less tangible assets such as goodwill, insurance premiums, IP rights, and cryptocurrency can be frozen in certain circumstances.
Freezing orders may bind not only your spouse but any third parties who deal with or benefit from the assets covered by the order; for example, trustees, business partners and/or bank managers.
This would be a breach of the Freezing Order and the party responsible will be in contempt of court; he/she would be at risk of having his/her assets seized, and receiving a fine, a community order, or even a custodial sentence.
What if my spouse is in the process of disposing or has already disposed of assets in order to defeat my claim?
Under these circumstances, you can make an application for an Avoidance of Dispositions Order which is an order by the High Court setting aside or preventing a transaction by one party (either the husband or wife) that was/is being made with the aim of defeating his/her spouse’s application for financial provision.
Yes, you may wish 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 in order to avoid inadvertently committing a criminal offence, which could result in you going to prison. You also need to be aware of any relevant civil laws, so you don’t end up being sued for damages.
Before you start gathering evidence of your spouse’s hidden assets it is a good idea to get legal advice to make sure you do not fall foul of any criminal or civil laws. You may also want to employ a forensic accountant to ensure smooth divorce proceedings.
The main role of the forensic accountant in divorce matters is to ensure financial transparency by investigating the parties finances, both personal and business, with the ultimate aim being to identify and investigate any discrepancies, including revealing hidden assets and income. If you want to ensure an equitable division of assets, it’s important to instruct a forensic accountant.
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