Financial Disclosure ensures transparency and fairness between parties when deciding on the division of assets, liabilities, and ongoing financial responsibilities.
For many, the thought of providing detailed financial information can feel invasive and daunting, but understanding the requirements and process can help make things more manageable. This guide explains what financial disclosure is, why it is important, and how to navigate it successfully.
What is financial disclosure?
Financial disclosure is the process of sharing all financial information between both parties during family law proceedings. This includes providing a complete and honest account of your financial situation, from income and expenses to assets, liabilities, and superannuation. The purpose is to create a clear picture of the family finances, so that a fair property settlement or spousal maintenance arrangement can be reached.
The courts require both parties to be fully transparent about their financial circumstances to ensure an equitable outcome. It doesn’t matter whether the property or assets are held in your name, jointly with your spouse, or even under a third party’s name—they must still be disclosed.
What must be disclosed?
During the financial disclosure process, there are several categories of information that you must provide. These include:
Income
This includes all forms of income, such as:
- salary or wages
- rental income
- dividends from shares
- government benefits
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If you have additional sources of income like freelance work, bonuses, or irregular payments, these must also be disclosed.
Assets
This includes all belongings of value, including:
- real estate
- vehicles
- bank accounts
- shares
- investment properties
- superannuation
- personal items such as jewellery or artwork
Liabilities
Any debts or financial obligations must be disclosed, including:
- mortgages
- credit card debts
- personal loans
- car loans
- outstanding bills
Expenses
Providing details about your regular expenses can help paint a realistic picture of your financial situation. This includes costs like:
- rent
- mortgage payments
- household bills
- education costs
- everyday living expenses
Financial resources
This can include trust interests, family trusts, or rights to receive any money in the future.
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If you have a complicated financial situation, it may be helpful to consult a financial adviser or accountant to assist in documenting all your financial details comprehensively.
Why financial disclosure is so important
Fairness and transparency
By disclosing all financial information, both parties are working towards a fair and equitable outcome. Transparency prevents one party from hiding assets or manipulating the financial situation to gain an unfair advantage.
Avoiding legal consequences
If a party fails to provide complete financial disclosure, they risk serious legal repercussions. Courts can impose penalties, and any settlement or court orders may be reconsidered if information is later found to have been hidden or misrepresented.
Enabling effective negotiation
Financial disclosure provides the information necessary to negotiate a fair property settlement or spousal maintenance agreement. If the full financial picture is not known, it can be difficult or impossible to reach a reasonable agreement.
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Hiding assets or misrepresenting your financial situation can lead to severe consequences. Courts take a very dim view of dishonesty during financial disclosure, and penalties can include cost orders or even imprisonment in extreme cases.
How financial information is disclosed
In most family law matters, financial disclosure is provided by exchanging documents and filling out the required forms. Below is an outline of how the process typically works:
Gather your financial documents: Start by collecting all necessary documentation that gives an accurate account of your financial position. This may include bank statements, pay slips, tax returns, loan statements, superannuation statements, and other relevant documents.
Complete a financial statement: You may need to complete a formal financial statement. This document summarises all your income, assets, liabilities, and expenses. It is typically required by the courts, and must be filled out accurately and comprehensively.
Exchange documents: Financial disclosure involves providing these documents to the other party. This can be done directly between the parties or through your solicitors. Both parties must have the opportunity to review and verify each other’s financial information.
Respond to requests for more information: If the other party requires additional documents or clarification, you may need to provide supplementary information. It’s best to be prepared for questions and have your documentation in order.
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Being organised with your financial records from the start can save you time and stress later on. Keeping clear, up-to-date records of your finances makes the process much more straightforward.
Dealing with non-disclosure issues
Unfortunately, there are times when one party might refuse to provide financial disclosure or attempts to hide assets. If you believe that your former partner is not being truthful or forthcoming with their financial information, there are steps you can take:
Practical tips for successful financial disclosure
Unfortunately, there are times when one party might refuse to provide financial disclosure or attempts to hide assets. If you believe that your former partner is not being truthful or forthcoming with their financial information, there are steps you can take:
- Be honest and transparent
Full disclosure is a legal requirement, and being open and transparent is the best way to ensure a fair outcome.
- Stay organised
Keep copies of all financial documents and correspondence in an organised manner. This will make it easier to provide information and respond to requests promptly.
- Get professional help
A lawyer can help guide you through the disclosure process, and an accountant or financial adviser can assist with complex financial details. Getting help early can save time, reduce stress, and avoid costly mistakes.
- Avoid unnecessary conflict
Financial disclosure can be an emotional process, especially if there is mistrust between the parties. Try to keep communication open and professional, and aim to resolve issues as calmly as possible.
