Financial Disclosure: What is it and why is it important?
What is financial disclosure and what is my duty of disclosure?
As part of property matters in the Federal Circuit and Family Court of Australia (“FCFCOA”), as parties are required to provide each other full and frank disclosure of all information and documents that relate to the financial and/or property matter of the marriage/relationship. This obligation is called your duty of disclosure.
Financial disclosure is essential for property matters as in order to be able to run a matter, you need to know what is in the property pool, who owns what and how much it all is worth and if there are any debts or liabilities.
What people often misunderstand is that financial disclosure is not a one and done obligation, but is instead an ongoing obligation. As you’d imagine, it can be quite difficult trying to divvy up a property pool when the figures you are working off of are 6 months out of date and you have no idea if the value of the pool has increased or decrease and by how much. Another family law myth is that only the balance of the pool is set at the date of separation. This is not the case, with the value of the pool being whatever it is when the matter settles, or the court makes final orders. If you’d like to read more on ending financial relationships, you can read our article here.
What documents do I need to provide as part of financial disclosure.
As part of financial disclosure the parties are required to disclose all assets, liabilities, superannuation interests and financial resources that they have, both in Australia and overseas.
These documents can include but are not limited to:
Statements for any bank accounts and/or credit cards they have;
Evidence of their debts, loans or liabilities;
The details of their employment and current payslips;
Tax returns;
Superannuation statements and current super balances;
Any property they own and the value of the property (i.e. houses, cars, shares, jewellery, art, etc); and
Any businesses they own or have an interest in.
Additionally the parties are also required to disclose whether they have disposed of any property since separation or in the year before separation.
Why Financial Disclosure takes so long and why is it important?
Financial disclosure can be a lengthy process depending on the amount of financial disclosure that has to be reviewed and how difficult it is getting that disclosure. In some cases it can be exceptionally difficult to obtain financial disclosure as parties may not be particularly interested in disclosing all their finances to their former partner, despite the obligation to do so.
In order to ensure a fair and equitable split of the property pool, you need to know how much the pool is worth. This is often done with professional valuations when there are properties, businesses or valuable assets involved.
What happens if the other side’s disclosure is incomplete or inaccurate?
It isn’t uncommon for parties to resist providing financial disclosure. Sometimes during a proceeding, the other side will refuse to provide full financial disclosure in order to try and gain an advantage, or may not have been fully transparent with their finances during the relationship, so it can be very confusing.
In the event the other side has failed to provide full and up to date disclosure during your property proceedings, there can be severe consequences. The FCFCOA is empowered to make a number of orders to penalise non-compliance with duty of disclosure obligations. These orders currently range from the Court refusing to allow the non-compliant party to use undisclosed materials as evidence, staying or dismissing some or all of the case, ordering the non-compliant party to pay costs, fine the non-compliant party or even order their imprisonment.
You can read more on the consequences of misleading the court about financial disclosure in our article on False Testimony in Family Law: An Imprisonable Offence
In the FCFCOA, when one party withholds financial disclosure, the judge can, at their discretion, make reasonable assumptions about what the undisclosed material might reveal and make orders based on that assumption,
Over the years we have had matters where the parties to the proceedings have either been unable or unwilling to provide full disclosure of their finances either abroad and/or in Australia. In one such case, the facts that one of the parties held bank accounts, property and a pension in Canada was only disclosed late in the proceedings. In another, a couple with significant assets in Ireland and the UK had to have their overseas assets and investments valued with the value then be converted to Australian dollars and used to negotiate a property settlement. Unearthing overseas disclosure can be a significant undertaking, requiring persistence and a thorough understanding of the legal tools available, to ensure a fair and equitable division of assets. In some instances, parties agree to a cash adjustment in Australia in exchange for one party retaining their international property.
Voice Lawyers: Your Guide in Family Law Matters
This update is general in nature and is not legal advice. If you need help dealing with a parenting or property dispute or require assistance with a family law matter, at Voice Lawyers, we hear you.
If you are experiencing or contemplating separation, we suggest you seek legal advice as early as you can, even if you do not intend to separate for a few months or even years. We offer a 90 minutes early separation strategy session Voice Lawyers — Divorce, Separation and Family Law to prepare and inform clients of the process. Every family’s situation is different, and advice tailored to your specific circumstances can assist you in achieving your best possible outcome. We can assist if you would like a second opinion.
We help people navigate the complexities of family law with confident, practical advice. You can contact us at office@voicelawyers.com or call 02 9261 1954 to book a consultation to speak with one of our lawyers.