What is Financial Disclosure? Do I really need to provide my information?
This is a commonly asked question at the beginning of many family law property matters, and the answer is yes.
In property settlement matters, the Courts imposes an obligation on all parties to provide to each other full and frank financial disclosure relevant to their individual financial circumstance.
Providing your full and frank financial disclosure will assist your solicitor in understanding the nature and value of the asset pool and is a key factor in enabling you to resolve your matter.
Ideally, at the beginning of the property settlement process, each party is required to provide to the other, copies of all information and documents in their possession or control relating to any asset or liability that is held in their name solely, held with their former husband/wife or de-facto partner, or held jointly with any other person.
The document or information is relevant if it:
assists to verify the nature and value of the assets and liabilities, and financial resources of one or both parties (and even a third party)
assist to verify the nature and extent of current and future income of the parties, including employment and income from other sources such as a trust or company
relates to an issue in dispute, for example a contribution made by one of the parties to the asset pool or factors to future needs following the separation (for example the care of young children)
There are many consequences that may flow if you do not provide to the other side full and frank financial disclosure, including:
The Court may dismiss or stay all or part of your proceedings
Costs may be awarded against you and in favour of your former partner
The Court may refuse you to rely upon information or document that you have not previously disclosed
The Court may assign a value to the asset or liability that is in question so as to determine the value of the asset pool (which may impact on that asset or liability not being accurately represented).
If the non-disclosure is revealed after the Court makes a final order as to a property settlement, the Court may set aside the Order (even if the non-disclosure is discovered years later).
Ultimately, if both parties comply with their obligation to disclose their true financial position and circumstances, it will assist in getting to the issues more efficiently and hopefully without the need for court intervention. It is also likely that legal costs will be reduced as issues relating to lack of disclosure will not be raised and the key issue for dispute can then be focused on.
It is therefore important when entering into discussions regarding division of matrimonial property (and before proceedings are commenced) that you obtain legal advice about what documents you are required to provide. In negotiating a property settlement, ideally both parties should come to the table with the cards facing up. When noncompliance with the disclosure process arises, this will only inevitably slow down the process which potentially make it more expensive to finalise.