International Financial Disclosure in Divorce

Financial disclosure can become considerably more demanding when a spouse has assets held outside the UK because different banking systems, ownership rules, and currencies are likely to make it more difficult to establish the true financial position. Laurus helps clients identify the information that must be provided and investigate gaps in the evidence received from their spouse. Speak to our specialist family solicitors to arrange an initial consultation and develop your disclosure strategy today.

The scope of international financial disclosure

As part of the divorce process, a spouse must disclose relevant resources wherever they are situated, regardless of whether those assets were acquired before the marriage, inherited from relatives, or held in another country.

The court’s objective is to reach a fair outcome based upon the financial evidence provided. Under section 25 of the Matrimonial Causes Act 1973, the court considers each spouse’s income, earning capacity, property, other financial resources, together with their financial needs and responsibilities. This assessment cannot be carried out properly if part of the financial picture remains hidden or uncertain.

Documents supporting overseas disclosure

The principal financial statement completed by both parties during the divorce process is the Form E. Here, each spouse provides information about their property, capital, income, pensions, liabilities and financial needs.

The supporting evidence will depend upon the type of asset and the country involved; for example, foreign bank accounts will normally require statements covering the relevant period, together with evidence explaining large or unusual transactions. Overseas investments may need portfolio statements, transaction histories, and documents showing the ownership of the account.

Property evidence might include ownership records, purchase documents, and mortgage statements. In addition, it is likely that a local valuation will be required if the property’s current market value is disputed or cannot be estimated reliably. Where an overseas property is rented, tenancy agreements and rental accounts can help establish the income received and the costs associated with ownership.

Business interests may require company accounts, shareholder registers, tax returns, and constitutional documents detailing control and ownership. Further records may be needed where the spouse’s financial interest is not apparent from the registered shareholding. For example, management agreements or records of distributions may show that a person who appears to hold a minor interest exercises significant control or receives a substantial financial benefit.

Foreign pension disclosure may involve statements from the scheme administrator and an explanation of the benefits available on retirement. The English cash transfer value used for many domestic pensions may not have a direct equivalent overseas, so specialist actuarial advice can therefore be necessary before the pension can be compared fairly with other retirement provision.

Documents may also be required from foreign tax authorities, land or company registries. Where the records are not publicly available, the account holder may need to provide written authority or make a formal request for the information.

Foreign languages, currencies, and accounting practices

Records produced in another language should not simply be placed into disclosure without explanation. A reliable translation may be needed, particularly where a document contains information intrinsic to negotiating a fair settlement.

A company balance sheet may use terminology that appears familiar but carries a different meaning under local accounting rules. The financial year may end on another date, while tax treatment and depreciation practices may make figures difficult to compare with those of a British business.

The value of a foreign asset in pounds may change significantly while negotiations are taking place; disclosure should therefore make clear the exchange rate and conversion date that have been used. In an appropriate case, the settlement may need a mechanism for addressing substantial currency changes before implementation of the agreement.

Is it also important to factor in practical delays; it is not uncommon in these scenarios for foreign institutions not to have online access to historic information, or require requests to be made in person and supported by certified identification. Local holidays, time differences, and document-verification requirements can also extend the process considerably.

Addressing gaps and inconsistencies

Incomplete disclosure does not always arise from deliberate concealment; a spouse may misunderstand an unfamiliar financial product or believe that an inherited asset is irrelevant. Nevertheless, an explanation should be tested against the available evidence.

Once Form E has been exchanged, focused questions can be raised through a questionnaire, which allows a spouse to request clarification and seek additional documents. That said, the questions should be tied to an identifiable issue rather than used as a general investigation into every foreign connection the other spouse has ever had.

Where specialist knowledge is required, a forensic accountant may examine business records or follow movements between accounts. A local lawyer may be needed to explain foreign ownership law or advise how records can lawfully be obtained.

Refusal to disclose overseas finances

A spouse cannot avoid their disclosure responsibilities by saying that the information is held abroad or that the relevant institution will not cooperate. They will ordinarily be expected to take reasonable steps to obtain records that are within their control.

If voluntary requests do not resolve the problem, the court can direct the spouse to answer specific questions or produce particular documents. It may also require an explanation of the searches to locate any missing records and the reasons material cannot be obtained.

Continued refusal can lead to procedural orders and costs consequences, where, in serious cases, failure to comply may amount to contempt. Attempts to mislead the court through a knowingly false financial statement can carry consequences extending beyond the immediate dispute.

Direct disclosure from a foreign institution is not always straightforward because an English order may not bind a bank, company, or authority in another country. Local advice might be needed before evidence can be obtained through the courts of that jurisdiction. The expense and delay involved should be considered alongside the value and importance of the missing information.

Conclusions drawn from missing information

Where information should exist and no credible explanation is given for its absence, the court may draw adverse inferences from the evidence as a whole.

The court may make findings about the existence or value of resources based upon the material available. It can also take a robust approach when assessing a spouse’s income, control of a company, or access to funds held through another person.

A final financial order obtained without material disclosure may remain vulnerable. If significant overseas wealth emerges later, the other spouse may seek to have the order set aside, although the court will consider the importance of the omitted information and whether it would have affected the outcome.

Contact us now to request a free consultation with one of our specialist family solicitors.