Disclosure on divorce – is there ever TMI?

It cannot be said that during the recent trial involving Johnny Depp and Amber Heard they have shied away from disclosing every sordid detail in relation to their failed relationship. Almost to the point that one might accuse them of too much information ("TMI").

"Openness" is not always a feature when a couple embark upon separation or divorce. The process can certainly bring out the worst behaviour in one or both during what is undoubtedly a very emotional and stressful time in their lives. Both spouses are facing the uncertainty of a complete change in their personal and financial circumstances.

The divorce process can expose a complex web of both emotional and financial affairs. Both parties can end up feeling defensive and intent on trying to protect their assets or income, but willing to overshare on the emotional impact to them of the relationship breakdown.

Oversharing, or the lack of sharing, can pose a problem when it comes to finances. Often feelings of anger and resentment towards a spouse will cloud their judgement about the requirement to be open and transparent regarding their finances. That leads to an interesting question - how easy is it to hide assets in the context of a divorce action?

It is expected and encouraged both in the context of any negotiations or in the context of divorce litigation that both parties make a full and frank disclosure of their assets and income as at the date of separation. In Scotland, the entitlement to share in the matrimonial property crystallises as at the date of separation. The financial position is looked at as at that date, irrespective of any subsequent transactions. Both parties are expected to voluntarily undertake the process of financial disclosure. But what happens if this is not the case?

A court in Scotland has the power to set aside "avoidance transactions" which prevents one party seeking to move assets out with the reach of their spouse. The court also has the power to set aside or vary any transfer of, or transaction involving, assets owned by one spouse if the court is satisfied that the transfer or transaction had the effect of, or is likely to have the effect, of defeating in whole or in part any claim by the other spouse. If one party believes that the other party is going to dispose of an asset which may prejudice his/her claim, it is also possible to obtain an order from the court to prevent this disposal.

Warning signs of foul play may come in the form of official documents no longer arriving at the home address, or passwords to online accounts being changed to deprive one party of access to key information.

Where one party is wilfully obstructive, or deliberately seeks to hide the existence of assets, there is a process by which an order can be obtained from the court for recovery of documents. Penalties of non-disclosure can be harsh, to include imprisonment. The negative outcomes which can flow from non-disclosure invariably outweigh any perceived benefits of adopting this approach.

If it is discovered at a later date that one party has successfully concealed an asset(s), the court can set aside a previous order if it can be shown that there was material non-disclosure at the time at which it was made, which would have resulted in a different outcome had the true position been known at the time. Our advice is always that in the context of financial issues arising from separation, honesty and TMI really is always the best policy!

To discuss any of the information above, please contact Fiona Sharp, a Senior Associate in the Family Law Team of Brodies. Even with the current restrictions imposed by social distancing, we remain available to support and help clients and communication can be facilitated by telephone, email, Skype and Zoom https://brodies.com/divorce-and-family-law/.