What does full and frank disclosure of assets mean?

by Peter Magee on May 2, 2013

Peter Magee

You may have read court factsheets, or heard from your lawyers, about a duty to fully and frankly disclose all your assets, debts and financial resources. But what does this mean? And why is it important?

When you are negotiating property settlement you must be very honest about your assets, debts, and financial circumstances generally. The court needs to know the true position in order to make a judgement about how to divide the assets, what the true effect of the division is, and what each party will walk away with. The other spouse needs to obtain proper legal advice, based on the facts.

Disclosure includes telling the spouse about monies you may have received, or earned, since separation, money or items you have given away (at market price, at a lower price or for free), if you are about to receive an inheritance, if you have already received an inheritance, but not had it paid to you whilst the court proceedings are ongoing, if you have or will obtain a work payout, expect to change jobs and earn a significantly higher amount, or receive employee share benefits etc. Everything is on the table.

Disclosing new assets does not automatically mean your spouse can share in those assets. The court will still weigh up whether the spouse contributed in any way to those assets.

However, if a person does not disclose assets, or deliberately hides them from the other side the impact on a court decision can be great. The non-disclosing spouse can have a judge make adverse findings (if the case is current). A non-disclosing spouse could risk the judge making a finding that they are not to believed about anything, once the court forms the view that hat witness has deliberately withheld relevant information. This is even more the case if the non-disclosing person is otherwise a financially savvy person and ‘expected to know better’. The court would in those circumstances be unlikely to believe a simple, innocent mistake was made.

For past cases, a court can re-open the proceedings on the application of the other person (who may have learnt some new information), set aside the existing orders and make new orders. A costs order can be made against the non-disclosing person which could run to hundreds of thousands of dollars.

In a recent case, a husband, who earned $6.2 million in 2010, failed to tell the Family Court he had bought a luxury car and lied about how much money he obtained from the sale of a business and an inheritance his aunt left him, the Daily Telegraph reported recently. The asset pool was over $15 million. The judge actually increased the wife’s share because the husband “”intentionally and deliberately withheld relevant financial information as to his net assets and his entitlements under the estate of his late aunt”.

If you find yourself in a situation where you realise you have not disclosed all relevant financial circumstances, the best thing to do is to file an amended financial statement, or updating affidavit, drawing the attention to the new circumstances. It is far better to be open and upfront about the new information than find you are telling the court (and your lawyer!) this for the first time, under cross examination, in the witness box.

In today’s digital world, there is almost nothing which cannot be uncovered either by subpoenas issued to banks, examining loan applications, reviewing an HR file from an employer to see where the pay goes, looking at superannuation statements to see if any superannuation was rolled out into another fund, and the list goes on.

For more information about contributions, inheritances, spending or disposing of assets, see a specialist family lawyer at Armstrong Legal.

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