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What are the consequences of hiding assets in divorce proceedings?

Hiding assets during divorce proceedings in England and Wales is a serious offence with significant legal, financial and personal consequences. The judicial system places a high value on honesty and transparency to ensure fair settlements. Here are some of the potential consequences if you’re caught hiding assets:

1. Legal Repercussions

Contempt of Court: English and Welsh Courts require complete financial disclosure during divorce proceedings. Failure to comply with this requirement can result in a contempt of court ruling, which may lead to fines or even imprisonment.

Perjury Charges: You may face charges of perjury if you deliberately lied about your financial situation, as providing false statements under oath is a criminal offence.

2. Impact on Financial Settlements

The Court retains the power to revisit and set aside financial agreements in limited exceptional circumstances, one of which includes when there has been material non-disclosure within the original proceedings.

Where evidence emerges of hidden assets that should have been disclosed within the original proceedings and which were capable of being material to the Financial Order made in those proceedings, there is the possibility upon the Court revising the Financial Order made and the relevant financial landscape to make a significantly different and mor generous Financial Order in favour of your former spouse.

3. Increased Legal Costs

The subsequent discovery of undisclosed assets by one party is likely to cause a significant increase in legal costs for a number of reasons.

Firstly, the discovery of such assets by themselves may lead to prolonged or even fresh financial remedy proceedings which will only serve to increase legal costs and potentially reduce the available assets pool of assets for distribution between the parties, especially if the Court makes no order for legal costs against either party.

Alternatively, should the Court determine that a party’s conduct has been sufficiently below the standard expected, the Court may order the offending party to pay the legal costs of the other party, either arising from a specific application relating to undisclosed assets or in relation to the wider proceedings as a whole. In the event the Court were to make such an order, this will of course have a financial impact upon the party against whom the order is made.

4. Damage to Credibility

Loss of Trust: Hiding assets can significantly damage your credibility before the Court and undermine any confidence that you or your legal representation seek to present of you as an honest and trustworthy party before the Court.

Strained Relationships: On a wider scale, conduct of a dishonest nature is capable of placing further strain on personal relationships, including those with children and extended family, affecting any co-parenting arrangements.

5. Revocation of Legal Privileges

Adverse Inferences: If you are found to have hidden assets, the Court may draw adverse inferences against you in relation to any matter in the proceedings, which could lead to a less favorable outcome in both financial and custody or residency matters.

6. Complex Tax and Financial Issues

Concealing assets may involve misrepresenting income, potentially leading to tax evasion penalties which could further complicate your financial standing.

7. Stress and Emotional Toll

Emotional Strain: The process of hiding assets and the potential fallout if discovered can lead to heightened stress and anxiety, affecting mental health.

8. Ethical and Moral Considerations

Impact on Integrity: Acting unethically by hiding assets can leave long-lasting impacts on a person’s sense of integrity and self-worth, leading to personal regrets. It can raise professional ethics issued for your legal representatives, who must comply with their overriding duty not to mislead the Court at all times.

Conclusion

Hiding assets during divorce proceedings in England and Wales carries significant risks that can impact your legal standing, financial stability and personal relationships. Courts take a stringent view on asset concealment, imposing penalties that often outweigh any perceived short-term gains. It’s advisable to approach divorce proceedings with transparency and integrity, seeking legal counsel to guide you through a fair and equitable settlement.

This blog was prepared by Alexander JLO’s divorce solicitor, Guy Wilton on the 15th January 2025 and is correct at the time of publication. With decades of experience in almost all areas of law Guy is happy to assist with any legal issue that you have. He is widely regarded as one of the capital’s leading divorce lawyers. His profile on the independent Review Solicitor website can be found Here