When a marriage or de facto relationship comes to an end and a property settlement is required, it is important to understand what financial disclosure means for you and your former partner as it will be key to enabling you to resolve your matter.
What is financial disclosure?
During a marriage or de facto property settlement process, each party is required to give full and frank disclosure. This means that each party must provide to the other, copies of all information and documents that are relevant to their property settlement.
Documents are considered ‘relevant’ if they:
- Verify the nature and extent of the assets, liabilities and financial resources of one and/or both of the parties (often referred to as ‘the asset pool’) that will be the subject of division of the parties including
- Verify the nature and extent of the current and any future income parties including income from employment and from other sources such as a company or trust
- Relate to an issue in dispute in the property settlement (i.e. if the document/information could prove or disprove an issue in dispute) which may include the contributions each person has made to the asset pool and go to determining further matters.
What documentation is required?
Depending on the size and complexity of the asset pool the types of documents will vary, generally however, both parties need to produce:
- Evidence of income, including tax returns;
- Bank statements for the 12 months prior to separation to the current date (including accounts in the sole name of each party or in which a party holds jointly with another person);
- Trust and company documents;
- Superannuation fund statement;
- Documents to evidence any assets disposed of or sold in the 12 months prior to separation;
- Documents that provide evidence of any inheritance, gift from a family member or friend, a redundancy payment, personal injury award or lottery winnings;
- Documents to evidence any future asset transfer or income that is likely to come a party’s way (for example, share options, trust distributions, inheritances); as well as
- Documents that verify both parties financial position when they began living together (e.g valuations or purchase documents for assets owned, bank statements to demonstrate savings held or superannuation statements to prove entitlements at the time parties began living together).
The idea is to gather as many documents as possible to verify the nature and extent of the asset pool, and the nature and extent of the contributions made by each party during the relationship, including from the time that you have been separated for.
What if I (or my former partner) do not disclose everything?
If either party refused to provide disclosure of relevant documents, and the matter comes before the Court, the consequences may be that the Court could:
- Make an order for the person who has failed to provide disclosure (‘the non-disclosing party’) to pay the legal costs of the other party (in full or in part);
- Refuse to allow the non-disclosing party to rely on a document if it has not been previously disclosed to the other party;
- Stay (i.e. place on hold) or dismiss all or part of the non-disclosing party’s application;
- Find the non-disclosing party guilty of contempt of Court and issue a punishment of a fine or a term of imprisonment (although this is rare and only in extreme circumstances);
- If non-disclosure is only revealed after the Court makes a final property settlement Order, the Court may set aside the Order (even if the non-disclosure is discovered several years later).
If you a party is withholding documents, and the matter is before the Court, your family lawyer can explore the following options with you:
- File an application in the Court (supported by an affidavit) to seek an order for the other party to produce the documents;
- File a subpoena to a third party to obtain copies of the documents;
- Send a notice to the other party to produce the documents;
- Send a notice to admit facts to the other party; and/or
- Send a notice to a third party (not involved in the property settlement) to provide the documents.
Your family lawyer will need to take care in determining what is the best approach to obtain missing documents because there can be serious consequences for you if the above tools are not approached with the right attention and strategy for your case overall.
Managing your property settlement effectively
The idea in negotiating a property settlement is that both parties should come to the table ‘with their cards facing up’ so that decisions can be made from a fully informed position. Full and complete disclosure of all relevant documents is required to maximise the opportunity for an amicable and early resolution of the property settlement. The absence of cooperation in the disclosure process slows down the settlement process making it potentially more expensive to finalise.
Obtaining legal advice is essential before negotiating any agreement. This document provides general information only and does not constitute legal advice. Please call us (03) 8657 3751 to arrange your initial fixed-fee consultation.