Financial disclosure is a crucial part of ensuring divorce is fair. It’s the stage where both parties list the value of all of their assets, finances and liabilities so each individual’s personal wealth can be established.
You might think of it as being like calculating the total value of your married ‘estate’ so you can start to agree on the best way to divide it up fairly and equally.
It’s important to understand the significance of honest and accurate financial disclosure in divorce proceedings, as any attempt to hide assets or misrepresent their value can (and often does) lead to court action.
Our guide to divorce mediation financial disclosure will look in more detail at the process of valuing your assets, the paperwork you can file to help you proceed, and the different types of professional support available to you.
Throughout this guide, where we refer to marriage, this also applies to civil partnerships, and where we refer to divorce, this also applies to dissolution.
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Both parties need financial independence after separation. That includes the money you’ll need to cover your living expenses, a fair share of any savings and any appropriate allowance for childcare costs.
The financial settlement you reach during your divorce is your agreement about how to split the family finances. Except for ongoing arrangements like child maintenance payments and pension attachments, your financial settlement should ideally be full and final.
Because of this, accurate and honest financial disclosure in divorce or dissolution is a must. It’s the only way both parties can be confident about everything needing to be shared (and anything not considered part of the marriage or partnership).
Financial disclosure focuses on different types of monetary value you share with your spouse.
This can include, for example:
Your obligation to disclose specific investments may depend on several factors, including the existence of a prenuptial agreement and the date when you invested.
For example, in England, Wales and Northern Ireland, both parties’ total pension pots are taken into account when separating. In Scotland, only pension contributions made during the marriage are taken into account.
These are the kinds of specifics taken into account during divorce mediation financial disclosure sessions and are one reason why it’s important to seek professional help from a qualified financial mediator.
Financial disclosure may be conducted in several different ways. The standard legal document used to detail each party’s finances is called Form E. However, in amicable separations, you may not need to complete this form or go to court.
You can file Form E with the court without the need for legal representation. Both parties must complete Form E (you cannot use it to disclose only one party’s finances).
This option is not preferable, as you will need to navigate the process without professional support. Due to the many technicalities within financial disclosure, it is better to proceed with a solicitor or mediator.
You can file Form E under legal advice from solicitors. Each party will need their own solicitor, to avoid a conflict of interest.
This can often lead to conflict, as each solicitor must represent their own client’s best interests. As a result, you may encounter delays, additional legal fees and unnecessary hostility.
Divorce mediators can support you with Form E. This allows you to register your financial disclosure in court if you prefer to do so but avoids the combative nature of appointing solicitors for each individual party.
If choosing this option, it’s a good idea to opt for mediators with proven experience in financial mediation, so you know they have specific expertise in this area.
Form E is not mandatory. In many examples, divorce mediation financial disclosure is completed without filling in Form E or going to court.
This is typically during more amicable separations, where you have a good level of trust in your spouse’s valuation of their assets, or where your finances are relatively simple to split (e.g. shorter marriages or where a prenup is in place).
Both mediation options can be faster, with less legal expenses, and usually less argument. Divorce mediators have a goal to facilitate amicable communication between all parties, and to seek outcomes in the best interests of everybody – all of which align with open and honest financial disclosure, and a fair division of assets.
If you feel like you need to have Form E in place, then both parties will need to provide detailed financial information about a fairly long list of savings, investments and liabilities.
The form itself is 28 pages long, with an additional checklist of documents you may need to attach (e.g. bank statements and property valuations).
Form E includes valuations of:
You must also estimate your current income needs and whether you think these will change in the immediate future, by how much, and why you anticipate the change.
It’s a long and detailed document, and this is only a very brief summary of it. If you are considering asking your spouse to complete Form E, speak to your divorce mediator, who will be able to make sure you understand the types of documents you will need to support your valuations.
One of the last parts of Form E is to list the orders you want the court to make. This includes determining future ownership of the family home, ongoing spousal maintenance payments, and so on.
An important element here is the option to request a ‘clean break’. Doing so ends both spouses’ claims against the other’s finances, with the exception of parental responsibility to a child.
If you are satisfied your partner has disclosed their finances fully and accurately, and you are keen to make a clean break based on the agreed settlement, exchanging Form E (and the appropriate supporting documents, bank statements, property valuations etc) is a big step towards regaining your independence from them.
You should ultimately reach a financial agreement that works for both parties. This can be formalised in court via a Consent Order, or agreed less formally through financial mediation, without involving the courts.
In some cases, conflict can arise. During the early stages of divorce mediation financial disclosure can be a hurdle to overcome, but it can also be a source of disputes later in the process too – even after exchanging Form E.
A few reasons why this might happen include:
This is where mediation is so valuable. Unlike solicitors, who only represent one party, mediators are there to facilitate communication and to provide an independent, objective voice.
By working with both parties – in separate rooms if necessary – your mediator can help to overcome disagreements and make progress towards a full, fair and frank financial disclosure, without the need to file Form E in court.
The option is still open to you if you decide you cannot proceed without Form E, and your family mediator can help both parties understand the requirements.
Refusing financial disclosure in divorce is a significant decision. Ultimately, it is only likely to cause delays, unnecessary financial costs and a lot of stress for both sides.
Honest financial disclosure is beneficial for everyone as it ensures both parties receive a fair financial settlement once the divorce or dissolution is finalised.
It also means your ex-spouse will not be able to pursue you for more money in the future. If you are seeking a ‘clean break’ you MUST be honest about your finances, or the courts may be able to set aside any orders made at a later date.
If one party refuses to disclose their financial position, the other may ask the courts to order them to provide the necessary information. Failure to do so can result in fines and other penalties.
In extreme cases, where one party fails to disclose assets, they may be found guilty of fraud and contempt of court. This can carry a custodial sentence.
With all of that said, it’s never too early to discuss finances in divorce. You don’t have to have all the formal paperwork in place immediately – these things can (and do) take time.
If you want to make a start on agreeing to each party’s financial settlement, your mediator can help you to do so. The specific valuations and supporting documents can be finalised later as the other aspects of your separation reach their conclusion too.
No matter what stage you are at in your separation – from first thoughts of leaving, through to settling those final financial disputes – Marcia Mediation can give you the independent support you need.
Our expertise in financial mediation for divorce and dissolution means you can have confidence in our guidance, including the specific details of financial disclosure, Form E (if needed) and its alternatives.
We will work with you to overcome the obstacles, breaking down the barriers to an amicable financial agreement, with or without the involvement of the courts.
To find out more, contact Marcia Mediation today in complete confidence, and we can start the process towards regaining your financial independence from your spouse.
If you have any questions, call us on 0330 236 7450 or fill out this form
