How legal teams can uncover assets during divorce proceedings
The most recent divorce figures by the UK Office for National Statistics for England and Wales were released in 2021. With an estimated 42% of marriages ending in divorce, the subject is a hot topic in Britain.
Most divorce cases are resolved through agreements with both spouses happy to openly and honestly disclose their finances. However, an increasing number of cases in the UK are arising where divorce lawyers require a forensic accountant to assist. These cases usually involve one or the other spouse hiding or not disclosing assets. If you are a legal professional currently working with clients going through or about to enter divorce proceedings, you may want to speak to our forensic accounting team.
Uncovered assets meaning
If an asset isn’t included in a divorce settlement, then it cannot be split and even if the asset is discovered after the settlement is made, it may have already been sold.
If such assets are uncovered while the case is open, then the person doing it can be penalised by having to pay the other side’s legal costs or may receive a less favourable settlement. Alternatively, if the assets are uncovered following the settlement, the court can reopen the divorce case and make a different order.
The most common types of assets that are hidden during divorce
Many assets – such as cash, bonds, mutual funds, insurance policies, stocks, and annuities – can be hidden and even converted into cash to then buy luxury items. There have been many high-profile cases in the UK involving assets being hidden in offshore accounts.
However, a more common scenario is an individual giving their assets to a close friend or family member who can temporarily store their assets during the divorce settlement. Another common scenario involves employees speaking to their employers to postpone bonus payments and contracts until after the divorce.
If a spouse owns a business they can cook their books by making payments to non-existing individuals, use their corporate identity to hide assets and even underreport their income for the year on tax returns and financial statements.
The statistics on how often assets are hidden in the UK
A recent OnePoll survey of 800 divorced people in the UK discovered that just under a quarter of them admitted to trying to hide finances or items from their spouse. Although these figures cannot be taken as being representative of the UK, one in seven of those who answered the online survey said their main objective for hiding some of their assets after deciding to get divorced had been revenge.
Hidden assets in divorce – are they discoverable in the UK?
Divorces can quickly turn into a lengthy and confusing process with complicated assets and finances on both sides. It’s important to speak to a legal professional during your divorce who may also get in touch with a forensic accountant. Legal professionals such as matrimonial finance barristers can be highly effective when working with a specialist accountant and can help the whole divorce settlement process run smoothly.
Forensic accountants help solicitors investigate accounting discrepancies, financial inaccuracies and both business and personal finances. Such skills are particularly useful to expose hidden income, to investigate any claims of non-disclosure, to help trace offshore assets and advise on the likely value of assets including businesses which may have been artificially deflated.
Forensic accounting assistance with Alexander & Co
Alexander and Co can help legal teams with a range of services, including forensic accounting and tax services during divorce proceedings. Contact us if you are a legal professional looking to appoint these services. If you are an individual, it is best to speak to a solicitor for your divorce first, who will be able to help you uncover assets.