What is a fair distribution of assets during divorce?

To determine a fair distribution of assets during mediation, one should consider the factors outlined in Section 25 of the Matrimonial Causes Act 1973. This includes the income, earning capacity, property, and other financial resources of both participants; their financial needs, obligations, and responsibilities; the standard of living enjoyed during the marriage; the age of each party and the duration of the marriage; any physical or mental disabilities; the contributions each party has made to the welfare of the family; and the conduct of each party if it is deemed inequitable to disregard it.

By taking these factors into account, parties can work towards a fair and equitable distribution of assets that reflects both their current circumstances and future needs. That said, some decisions will be influenced by personal choice and preference, as well, and so preparing in advance is key. In addition, seeking legal and financial advice can be hugely beneficial.

Ultimately, any resolution reached will likely need to be approved by the court through a consent order, so you can relax and feel looked after throughout the process.

Suspecting Hidden Finances: Steps to Take

If you think your ex-partner is hiding assets and finances, it is important to address this as soon as possible as continuing to reach a resolution without full disclosure will mean that the agreement reached will not be ‘safe’, and the participant hiding finances will also be at risk of legal action after a resolution is reached if it is later discovered that there had been dishonesty.

Incomplete disclosure is often the main reason for participants to need to resort to formal channels…. And the courts have the ability to impose cost sanctions against individuals who ‘conduct themselves’ poorly e.g by hiding assets (see Tsvetkov v Khayrova [2023] EWFC 130).

If you suspect that your ex-partner is hiding financial information during mediation, follow these steps:

1.     Inform the Mediator: Communicate your concerns to the mediator, who can encourage transparency and honesty during the process.

2.     Request Further Disclosure: If financial disclosure seems incomplete, request additional details or clarification from your ex-partner.

3.     Consult a Family Law Solicitor: Seek advice from a solicitor specialising in financial matters to understand your rights and legal options.

4.     Gather Evidence: Document any evidence suggesting hidden finances, such as bank statements, financial documents, or property records.

5.     Court Order for Disclosure: If necessary, apply for a court order to compel your ex-partner to disclose all relevant financial information.

6.     Hire a Forensic Accountant: For complex financial situations, a forensic accountant can thoroughly investigate and analyse financial records.

7.     Consider Legal Remedies: If mediation fails, consider taking the matter to court, where financial disclosure can be enforced and decisions on asset division and support can be made.

Forensic Investigations and PODEs in High-Wealth Cases

If you are involved in a high-wealth divorce, and have the finances to support further investigation, consulting with forensic accountants and Pensions on Divorce Experts (PODE) can provide the clarity and assurance needed to achieve a fair outcome.

What is Forensic Investigation?

·       Forensic Accountants: Forensic accountants play a vital role in high-wealth divorces by meticulously examining financial records to uncover hidden or undervalued assets. Here's how they help:

·       Tracing Assets: Forensic accountants can trace financial transactions to locate assets that one party might have hidden or transferred to conceal their value. This includes bank accounts, investments, properties, and business interests.

·       Valuing Complex Assets: They are skilled at valuing complex assets, such as business holdings, stock options, and real estate investments. Accurate valuation ensures that all assets are appropriately accounted for in the settlement.

·       Identifying Financial Discrepancies: By analysing financial statements, tax returns, and other records, forensic accountants can identify discrepancies that may indicate hidden income or assets.

·       Investigating Lifestyle and Expenditure: They examine spending patterns to assess whether the reported income and assets align with the lifestyle and expenditures of the parties involved. Significant discrepancies can signal hidden assets.

·       Providing Expert Testimony: Forensic accountants can serve as expert witnesses in court, presenting their findings in a clear and understandable manner to support claims of hidden or undervalued assets.

What is a PODE (Pension on Divorce Experts)?

·       Role of PODEs: Pensions can be one of the most valuable assets in a high-wealth divorce, often requiring specialised analysis to ensure fair division. PODEs provide this expertise:

·       Evaluating Pension Value: PODEs assess the value of various pension schemes, including defined benefit and defined contribution plans. They provide accurate and comprehensive valuations, which are crucial for fair settlement discussions.

·       Understanding Complex Pension Structures: High-wealth individuals may have complex pension arrangements, such as executive pension plans or international pensions. PODEs have the expertise to navigate these complexities and provide clear valuations.

·       Calculating Future Benefits: PODEs project the future benefits of pensions, considering factors like retirement age, expected growth, and inflation. This helps in determining the present value of future pension benefits.

·       Advising on Pension Sharing Orders: They provide guidance on the most appropriate way to divide pensions, whether through pension sharing orders, offsetting against other assets, or earmarking. This ensures that the division is equitable and complies with legal standards.

·       Explaining Tax Implications: PODEs also advise on the tax implications of different pension division strategies, helping parties to understand the financial impact of their choices.

Conclusion

Full and frank financial disclosure is essential for fair and effective family mediation in the UK. It promotes transparency, informed decision-making, and legally binding agreements. Always let your mediator/ solicitor know if you feel disclosure may not be complete, noting that formal proceedings may be necessary if a resolution is not likely to be ‘safe’. Thankfully, most participants move through mediation with a view to reaching a fair and amicable resolution to their dispute and full and frank disclosure though the mediation process will enable this, and enable transparent and equitable settlements.

For further guidance or to schedule a MIAM, please click here. You may also be interested in seeing our guide on ‘The best time to Mediate’ here.

To find out more about how Latitude Mediation can support you after you have made the decision to move forwards, get in touch here or email info@latitudemediation.co.uk.