Divorces involving a family business
The importance for business owners to seek early advice to minimise future problems should their marriage break down in the future.Read more
Mrs Byrne had inherited £1m from her father but did not want her husband, whom she intended to divorce, to know about it.
Her friend, a builder named Mr Howie, suggested that she transfer £600,000 to him to effectively hide it from her husband.
However, Mr and Mrs Byrne were able to work through their marriage difficulties and she asked for her money to be returned, Mr Howie refused. He claimed that she had made an investment in his business. Fortunately for Mr and Mrs Byrne, in this case, the court ordered Mr Howie to repay the money.
In a divorce or separation, there is a duty to give a full and frank disclosure to each other and to the court. This means that a husband and wife, or civil partners, need be open and honest about each other’s financial positions to include their interests in property, other capital assets, income and pensions.
For an agreement to be legally binding, disclosure must be exchanged. Should it later come to light that assets or income had not been properly disclosed, the agreement or court order can be ‘set aside’.
The court’s overriding objective is to achieve fairness, which requires full and frank disclosure. This can be difficult to accept, particularly in an acrimonious divorce or separation, where emotions often run high.
In an ideal world, Mr and Mrs Byrne would have been able to agree a fair financial settlement directly. Whether an agreement was reached directly or through solicitors, they should have disclosed documents and information to include; bank and building society statements for the preceding year, details relating to other capital assets to include properties, supported with valuations, their most recent P60’s, payslips and up-to-date pension statements.
By examining the bank statements, Mr Byrne or his solicitors would have been able to detect the transfer of £600,000 to Mr Howie and could then have raised queries.
Unless an agreement could be reached, either directly, via mediation or solicitors, it would be necessary for the court to make an order. If Mrs Byrne refused to provide disclosure on a voluntary basis, the court could order her to do so. If she failed, there would be consequences such as a costs order requiring her to pay her husband’s legal costs, with the ultimate sanction being imprisonment.
When considering a fair financial settlement, the following factors must be considered:
Only once full and frank disclosure has been exchanged should a settlement be reached.
Dishonesty and non-disclosure will not be tolerated by the courts.
Instructing a specialist solicitor to assist with financial aspects of divorce and separation can help you to achieve a fair settlement.
Should you suspect that your partner has not been completely honest about their finances, our Family & Matrimonial team can assist you.
We are highly experienced in locating assets that have not been voluntarily disclosed; forensically analysing accounts and financial statements.
Assets that we have assisted clients in discovering have included properties, bank accounts, trusts, and on one memorable occasion, a racehorse.
For more information and advice, please contact us on 01332 226 174 or complete the form below.
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