The cost of lying in your divorce or dissolution

Lying about your finances during a divorce or dissolution rarely stays hidden. When it emerges, it often changes the entire course of proceedings.  What begins as an attempt to protect assets can quickly become a reason for increased scrutiny, higher costs, and unfavourable outcomes.

Divorce and dissolution are already stressful enough without a dispute over money turning into a battleground of mistrust. For many separating couples, finances become the most emotionally charged issue of all, particularly where one party feels they have more to lose.

It is in that environment that people can make poor decisions, sometimes encouraged by well-meaning friends who are not familiar with the law or legal process. Tactics can include assets being ‘forgotten’; income is played down; and money is moved quietly, with the hope that it will never be questioned. Some assume that their former partner will never uncover the truth, while others convince themselves that such actions are justified. The family courts in England and Wales take a very different view.

We have never seen dishonesty make a divorce cheaper or easier, but we have seen it do the opposite. Honesty is not simply encouraged in financial proceedings; it is required by the court. A failure to be open about your finances can have severe consequences, many of which far outweigh whatever short‑term advantage you thought you might gain.

Full and frank financial disclosure

When a marriage or civil partnership ends, both parties have a duty to provide what is known as ‘full and frank financial disclosure’ of their assets and liabilities. This duty applies whether matters are dealt with by agreement, negotiation, or court proceedings. In practical terms, it means laying all your financial cards on the table.

You are required to give a complete and accurate account of your financial position to include:

• all property interests, in the UK and abroad;
• bank and savings accounts, whether in sole or joint names;
• investments, shares, and ISAs including any cryptocurrencies or investments;
• pensions;
• business interests and company shareholdings;
• debts and liabilities;
• significant recent expenditure or transfers of money; and
• income.

Disclosure is usually provided through Form E, which is supported by documentary evidence. This form is not simply a box‑ticking exercise; it is a sworn document, meaning that you are stating to the court you are telling the truth. The court expects it to be treated accordingly.

Crucially, the obligation to disclose is ongoing. If circumstances change during proceedings that change must be revealed, for example, if you receive a bonus, sell an asset, or incur a new liability.

What happens if assets are not disclosed?

Some people assume that the worst that can happen if non‑disclosure is uncovered is that the assets will be taken into account later. That is an extremely risky assumption.  The courts have consistently taken a robust approach where dishonesty is identified.

Depending on the severity and impact of the non‑disclosure, consequences may include:

• Financial orders being set aside - even long after a divorce has concluded, undisclosed assets can justify reopening a settlement.
• Adverse assumptions - where the court believes assets exist but cannot identify them precisely, it may draw inferences against the dishonest party.
• Penalty in the distribution of assets - the court may adjust the final division to reflect the poor conduct.
• Costs consequences - being ordered to pay the other party’s legal costs is a common outcome.
• A finding of contempt of court - deliberate dishonesty can, in extreme cases, lead to contempt of court proceedings, and if you are found to be in contempt of court, you could be facing a custodial sentence.

Once your credibility is damaged, it is very difficult to recover. Every explanation is viewed with scepticism, and even legitimate issues can be met with suspicion.

How non‑disclosure commonly occurs

Non‑disclosure is rarely dramatic. More often, it happens gradually and quietly.  Some of the most common examples include:

• Bank accounts and savings - accounts held in sole names, online savings products, or long‑standing ‘dormant’ accounts are regularly omitted.
• Business Interests - this is an area where problems often arise, and tactics may include: suppressing profits; retaining funds within a company; timing dividends to fall outside disclosure periods; and paying personal expenses via the business.
• Property and overseas assets - property interests held abroad, or bank accounts abroad may be hidden.
• Pensions - Older pensions are sometimes ‘forgotten’ and, given the size pensions can reach, this can materially distort a settlement.
• Transfers to family members - money transferred to parents, siblings, or friends shortly before separation is often described as a loan or gift. The court will look closely at whether this explanation holds up.
• Cryptocurrency and new asset classes - digital assets are increasingly common and increasingly scrutinised, and a lack of understanding is not accepted as an excuse for non‑disclosure.

What all of these scenarios have in common is that they tend to unravel when disclosure is examined properly.

The role of a forensic accountant

Where there are genuine concerns about missing or manipulated assets, specialist expertise may be required and forensic accountants are frequently instructed in complex financial cases. Their role is to analyse financial information objectively and to identify inconsistencies, patterns, and anomalies.

They will typically:

• examine bank statements across multiple accounts;
• track money through chains of transactions;
• review company accounts and director loan balances;
• compare declared income against lifestyle evidence;
• identify unexplained cash movements; and
• analyse tax returns alongside disclosure.

Once forensic analysis begins, matters often escalate quickly. Requests for documentary disclosure increase and explanations are tested rigorously.

Importantly, if it is necessary, this stage is often both expensive and intrusive. Parties who could have resolved matters sensibly sometimes find themselves facing prolonged litigation simply because trust has been lost.

When something does not make sense, further questions are asked and once that happens, the scope of enquiry usually widens rather than narrows.

Why honesty is the better financial strategy

It may seem counter intuitive, but in many cases, honesty actually protects a party’s position.

An open approach can reduce legal costs, shorten the length of court proceedings, increase credibility with the court, encourage early settlement, and avoid years of uncertainty.

Family judges understand that separating couples feel anxious and defensive, but they do not tolerate deliberate deception.

In our experience, cases driven by dishonesty are almost always more expensive, emotionally as well as financially, than those handled transparently from the outset.

How we can help

If you are in the process of separating and are concerned about financial disclosure, whether your own or your former partner’s, early legal advice is critical.

We regularly advise clients on:

• how to approach complex disclosure properly;
• identifying and addressing concerns about hidden assets;
• business interests and pensions; and
• protecting settlements from future challenge.

Divorce and dissolution of a civil partnership is a major financial turning point. Getting the foundations right can prevent very costly consequences later.

If you would like confidential advice about your situation, please contact us to arrange an initial consultation. Thoughtful, experienced guidance at the outset can make all the difference.

For further information, please contact a Legal Adviser in our family law team.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.