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Complete guide to financial disclosure for married couples or those in a civil partnership

What is financial disclosure in divorce?

It is a process that two parties undertake to ensure, as much as is possible, fairness with their financial arrangements.

Each party discloses to the other all of their individual finances – assets and liabilities. This should provide the best opportunity to achieve a fair financial settlement on a divorce or dissolution.

What does financial disclosure cover?

Financial disclosure covers the assets, liabilities, income and forecasted budgets. It covers:

  1. Current income from all sources
  2. Future expenditure based on what you can reasonably forecast
  3. Current assets and liabilities, such as properties, credit card debts and pensions
  4. Provision of evidence, through the production of documents, that will enable each party to verify the disclosure of the other party.

In mediation, you will complete your own disclosure as best you can. At the first meeting, any gaps will be identified and discussed. It is quite normal for clients to leave the first joint mediation with a list of action points to be completed in advance of any subsequent meeting.

What options do I have for financial disclosure?

There are four main ways to conduct a financial disclosure:

  1. For litigants in person, direct with the court using a Form E
  2. Through solicitors using the Form E
  3. Through mediators using the Form E
  4. Through mediators using the mediation disclosure forms

It is important to note that both parties must use the same process. In mediation, should one party elect to use a Form E, then both parties must use it, as this is what would be requested were you to go to court.

Most clients use Mediate UK’s financial disclosure forms, which are less onerous to complete and are accepted by the courts as a disclosure.

Do I receive a copy of the other party’s financial disclosure?

Yes, you receive a full copy, with supporting evidence, of each other’s disclosure. Either you, or your solicitor, are then able to scrutinise this and ask questions when you are in the mediation meeting.

What is a Form E and where can I obtain one?

A Form E is a legal document. You will need to sign the Form E, have it witnessed. It will be sent to the court if your case goes to family court.

This link will take you to the Form E download page.

Is financial disclosure mediation accepted by the courts?

Once completed, the mediator disclosure forms will be recognised by courts as a full disclosure.

The mediator provides a summary in a document called an ‘Open Financial Statement’ and it is this document that can go into court, if required.

Do I have to disclose all my finances on a divorce?

Yes, however, I would rephrase this question and ask this:

“If you do not disclose everything to each other, how can you be certain that your financial settlement is fair?”

Also, your financial settlement on divorce is designed to try to give you both a clean break. If you fail to disclose something, it could leave your agreement open to a legal challenge at any time in the future, based on the principle of ‘non-disclosure’.

Can I hide my assets during a divorce?

If you hide assets, then your agreement remains open to a legal challenge at any future point and the court would take your non-disclosure into consideration when considering the matter of legal costs. See our blog here for examples when this has taken place.

Do you want to take that risk?

If you want to have a consent order, which makes your financial settlement legally binding, then the court requires you to have a full and open financial disclosure. In fact, you will sign a ‘Statement of Truth’ on the D81 (Statement of Information for the Consent Order) where you promise the court that you have completed a full and open disclosure. If, at a later date, it is proven in court that you did not disclose all of your assets, it is likely that you’ll have committed contempt of court and possibly fraud. If so, the court can:

  • Tell you to go through the entire process again
  • Order a different settlement
  • Order you to pay all the legal costs
  • Fine you
  • Imprison you

My financial disclosure isn’t ready, but we need to talk finance. Can we?

Yes and in mediation it is common for clients to ask to discuss one of two options in advance of the full financial disclosure being ready:

  1. Aims and objectives
    1. If both parties agree, you could attend an initial meeting on finance to discuss your broader aims and objectives. This can help reassure those with worries or concerns about their financial future.
    2. It is unlikely that you’ll be able to reach finite conclusions in this meeting, but some clients find it helpful to hold an initial meeting to discuss what they are trying to achieve.
  2. Current household running costs and how to meet them
    1. If there is a pressing need to discuss ongoing financial arrangements, you can book a meeting to discuss this, providing that you both agree to the meeting. This may be a forthcoming mortgage payment or to agree who will cover the household bills whilst you agree the longer-term financial arrangements.

Do I need a solicitor to complete a Form E?

No, you do not need a solicitor to complete a Form E, instead you can act as a litigant-in-person, where you will complete the form and sign the Statement of Truth.

When acting as a litigant-in-person, you will need to scrutinise the form of the other party. This is not something a mediator can do on your behalf as it could jeopardise their impartiality. Once both Forms E are ready, you will usually notify Mediate UK and we will set a meeting date to go through them with you both.

However, if you are legally represented, your solicitor will usually issue the Form E to you and, once completed, they will set an exchange date with the other solicitor. Your solicitor will scrutinise the disclosure of the other party and, may ask questions of the other solicitor. Depending upon how well the Form E has been completed, this process can take some time.

What documents do I need for a financial disclosure?

  1. Property valuations
    1. To a court standard - one chartered surveyor or three estate agents
    2. In mediation you can agree to vary this by consent between you
  2. Mortgage
    1. A redemption statement – this is different to a monthly or annual statement and usually needs to be requested from your mortgage company.
  3. Bank accounts, savings accounts
    1. For mediation – current statement with the option to ask for up to 12 months
    2. Form E – 12 months’ worth of bank statements for each account you hold
  4. Endowments/insurance
    1. Surrender value of any policy
  5. Shares, investments
    1. Portfolio valuation
    2. Valuation of shares against the stated number owned
  6. Cars
    1. Online valuation
    2. If there is a car on lease, then the finance arrangements can be more complicated and often there will be a liability rather than an asset
      1. Parkers valuation
      2. Surrender value of car
  7. Pensions
    1. Cash Equivalent (CE) or Cash Equivalent Value (CEV) or Cash Equivalent Transfer Value (CETV) for all private pensions
  8. Liabilities
    1. Current statement for each liability such as credit card or redemption figure for a loan

In mediation, we work on the basis that both parties are attending in a voluntary capacity. If you want to see a document that is not disclosed, you should ask.

Mediation is an open and transparent process and where one party refuses the request of another, it can have serious implications for the success of the mediation process. However, mediation would be guided by the normal court standards. For example, if one party were to ask the other for the last five years’ worth of bank statements, a court is highly unlikely to sanction this on the basis of proportionality. In mediation, we would follow the court standard of 12 months if one party requested this.

The other party is hiding assets in divorce, how can I prove this?

Typically, this is very difficult to prove. If you wished to pursue this course of investigation, it is likely that mediation will be unsuitable, as mediators have no power of investigation.

Solicitors can appoint forensic accountants and they would be asked to scrutinise the bank statements to identify whether the income and expenditure match. A forensic accountant seeks to identify from where income emanates, and the expenditure that the income supports. In essence, they try to ‘follow’ the money and identify any discrepancies. A forensic examination can be very costly, in excess of £10,000 in many cases, so you should take legal advice before doing so.

I have a small pension, do I need to declare this?

The transparency, sincerity and integrity of each disclosure is vital. It doesn’t matter what the balance is, what matters is that you have disclosed it openly and willingly. It is important for both parties to see the transparency of an open disclosure.

If one party has a large pension it can be reassuring to them when they see that the other party freely and openly discloses all their assets, no matter how small. This issue can often have a very positive effect in mediation. Conversely, where one party has not made a full disclosure, and is challenged, it can have a damaging negative impact.

Without a full disclosure, your agreement could be challenged at any point in the future.

I have a pension that is only a few months old. Do I need to value it?

Yes, all pensions must be disclosed no matter how small or how new they are.

I have a pension in payment, how do I value this?

This can be a difficult area and, if you are not careful, a costly one too.

With pensions in payment, the pension company will often make a charge to produce a CE. If this is under £100, then it is probably worth paying. However, we’ve seen costs of over £500 and more than £1000 in some instances. In such situations, you may want to discuss the matter in mediation with the other party.

Pensions in payment appear twice in the disclosure process. They are an asset, so must be logged under pensions. And they are also providing an income, so they must appear on the income sheet.

Will an annual statement on a pension be acceptable for disclosure?

Is it less than 12 months old? If so, then yes, you might be able to use this to start mediation. But, it is the court that requires all pensions to be valued by way of a CE, so you should order one and update the pension that’s been disclosed as soon as you are able.

How do I value my house in a divorce?

To a court standard, you need to seek one valuation from a chartered surveyor or obtain valuations from three different estate agents and work with the average of the three.

Bear in mind that in mediation you can agree to use a value agreed between you, perhaps from an offer received, if you so wish. Be careful with online valuations as they can vary considerably.

Are current accounts excluded from a financial disclosure?

As a general rule, all current accounts are deemed to be working accounts and are ignored. But you do need to disclose them all – even if there is a zero balance in the account or are in an overdraft.

If a current account is being used as a savings account and has a balance over a certain sum (Mediate UK uses £5,000 as the benchmark) then the mediator will ask if that should be a savings account and recorded as an asset.

Is my inheritance included in the divorce settlement?

Inheritance in family law is complex, and you may want to consider taking independent legal advice on this.

The basic principle is that inheritance doesn’t form part of marital assets. But, it depends on what you did with that inheritance and when it was received:

  1. If you put the inheritance into a bank account that you control, then it is likely to remain your inheritance and so it may not be seen as a marital asset.
  2. However, if you built an extension on the family home and did not protect it legally, then courts are more likely to see it as an asset of the marriage, especially in a long marriage (15+ years)

If one party has a large cash sum of inheritance in a bank account and the couple are struggling to meet their needs moving forward from the assets of the marriage, it is unlikely that a court will ignore the inheritance. While they may not agree it is an asset of the marriage to be shared, they can adjust the split of the marital assets to provide more assets to the party without the inheritance.

Are assets before marriage protected or do I need to disclose them too?

Your disclosure must include all current assets and liabilities. But this does not mean you are agreeing to share them. That is the second part of the process and would be discussed under the heading of Financial Settlement. This follows the Financial Disclosure, once the Disclosure has been agreed.

I can’t find any information on an old pension, do I need to disclose this?

No, we would encourage you to think of two things in this instance:

  1. There must be a full and open disclosure – so you need to do all that you can to track these pensions
  2. You are trying to reach a fair settlement – how can this be achieved when assets are forgotten about and not disclosed?

You can try to find a lost pension using this online tools https://www.gov.uk/find-pension-contact-details

I have a pension in the pension protection fund. Is that included in the divorce?

Yes and this must be included. It is specifically designated as a PPF pension in the court document.

What is a CETV?

CETV stand for a Cash Equivalent Transfer Value – sometimes called a CE (Cash Equivalent), CEV (Cash Equivalent Value), TV (Transfer Value).

This document is different to an Annual Statement or a Pension Benefits Statement. It shows the current value of your pension fund, as opposed to the forecast amount that it will pay out when you retire.

The court requires all pensions to be valued by way of a CETV, or equivalent, as a starting point. In some cases it may make more sense for the pension to be valued by an actuary or PODE. Such valuations can help with a true current valuation of a final salary pension scheme, or can help equalise pension funds in retirement. There is a cost to such reports, which is usually in excess of £2,500.

Do our financial disclosures get verified?

In mediation, the participants are responsible for verifying the disclosure of each other. The mediator cannot do this as it would have implications for their impartiality.

Solicitors can verify the Form E disclosures as that forms part of their role. You can then ask any questions raised in mediation.

Is my business seen as a marital asset?

Generally speaking a business is an asset, so it needs to form part of the financial disclosure.

Whether or not it is a marital asset will very much depend on circumstances and these are too broad to cover in this guide. It will be affected by the length of the marriage, the needs of all parties, when the business was established, share ownership and structure of the business, etc.

If we take at two examples:

  1. Long marriage (15 years+) and the business was set up during the marriage. The likelihood is that this will be seen as a marital asset.
  2. You are married and you separated two years ago and agreed a split of the assets. Since then one party has established a very successful business. The owner of the business could readily claim that the other party should not benefit as they’ve made no contribution and you separated two years ago. Courts are likely to have some sympathy with this position especially if the needs can be met from the other assets of the marriage.

How do I value my business for divorce?

This very much depends on the nature of the business:

  1. Is it a trading business that owns plant, machinery, property, etc? Usually, in such cases, if you sold the business tomorrow there would be an asset value to the business.
  2. Or, are you a sole trader working as a limited company as a tax efficient way of managing income? Here there are unlikely to be any significant assets – perhaps, just the balance in the bank account. It is unlikely that you’d find someone to buy this business.

In example 1, you can ask your accountant to provide a valuation for the business if you were to put it up for immediate sale. You’ll need to supply this valuation and the latest set of annual accounts as part of your disclosure. This is not to say the business will be broken up and sold – you would probably want to protect any trading business as it is the source of income.

In the second example, it is unlikely that there is any asset value to the business and all that you would declare is the balances of any business accounts.

When do I get a copy of the other party’s financial disclosure?

When can you agree to swap your disclosures? In mediation, everything is done by agreement. You can exchange documents before you have a joint mediation meeting on finance, or you can do the financial disclosure with the mediator, and exchange documents afterwards so that you can prepare questions for the subsequent meeting.

As a mediator, I would try to avoid swapping disclosures at the start of the meeting – the temptation to open and peruse is far too great as the participants become engrossed with the information they are seeing for the first time.

When doing Forms E, these are usually exchanged between solicitors ahead of any negotiation on settlement as they need to be ratified and agreed.

Do I have to complete a detailed disclosure of expenditure?

This would depend on the circumstances. The mediator has a duty to help you consider the viability of any agreement reached. Filling out the forecast budgets can help you plan and be re-assured that the agreement you are reaching is a viable one moving forwards. But it is not essential and you can just say you have considered this or show a high-level expenditure figure for the documentation we produce.

If you are mediating on spousal maintenance, then a full budget showing out your reasonable needs for the future would need to be produced.

Do we include possessions in our financial disclosure?

What do you want to do?

Different people have different views when it comes to possessions. Is a wedding ring a gift? Is it a marital asset?

Such decisions are generally left to the parties to agree between themselves, outside of mediation. But they can be included in mediation if required. If they are to be discussed in mediation, mediators will tend to set a level of single items with a value over £500.

What many clients find useful is to make a list of possessions in the family home. Use three columns:

  • I would like the item
  • I do not want the item
  • I might take the item if you do not want it

The parties each complete a sheet and then they compare. Items that one person wants are easy to deal with. Likewise, items that both do not want. This acts to funnel the possessions down to – hopefully – a manageable amount that can be agreed more quickly.

Do we have to do a financial disclosure?

If you use a solicitor or a mediator, they will expect you to complete a full and open disclosure of all your assets. These will be summarised into a court document that will show the court:

  1. Value of any property net or any mortgage
  2. Other capital e.g. savings, investments, etc
  3. Liabilities (excluding mortgages~) e.g. loans, overdrafts
  4. Pension valuation including Additional State Pension (Cash Equivalent)
  5. PPF Compensation valuation

These five figures must be disclosed. In mediation, if both parties agree, then they do not need to complete the detailed disclosure. They can just disclose the total values of the above five areas, without a breakdown. However, both parties will need to sign a waiver exonerating the mediator and the mediation service from all liability against future claims and explaining that they understand the consequences of not doing so.

You can get divorced without a financial disclosure – but you would not be able to get a financial consent order. This could leave either of you open to a future claim at any point after your divorce. There is more aboue financial consent orders here.

Do I have to disclose the finances of my new partner?

This would again depend on the circumstances. The court want to know if you are, or if you intend to co-habit. It is important you answer that question correctly. Your new partner’s assets (property and pensions etc.) are not included in the financial disclosure. However if you are living with a new partner and looking at the issues of spousal maintenance, then your partner’s contribution to the overall household expenses would need to be included in your budget. The court would expect you to make, as far as possible, an open disclosure of your financial situation, including contributions from your new partner. The court have no power to demand any of your new partner’s assets are shared with your ex-spouse.

Is future inheritance considered as part of a divorce settlement?

No, future inheritance is not an asset of the marriage. It is not guaranteed to be received as the parents may change their wills, or require expensive ongoing care that significantly reduces the amount of any inheritance. Money due that is subject to probate should be disclosed.

We are not married or in a civil partnership do I need to disclose all my assets?

No, if you are not married, only the assets and liabilities in joint names need to be disclosed. In mediation you are free to discuss any financial arrangement you can agree on. But if your matter went to court they will only be able to consider assets or liabilities in joint names. There are separate areas of civil law that can deal with an interest in a property that you do not own. It is a complicated area and you should take independent legal advice on this. There is no recognition in law of a common law husband or wife.

What is the financial disclosure process on a divorce?

There are five steps to reach a financial agreement on a divorce or separation and your financial disclosure plays a key step in this process:

  • You both make a full financial disclosure of all your assets
  • You agree the financial disclosure between you
  • You agree what assets are of the marriage and which are to be ring-fenced
  • You agree how to divide up the assets of the marriage fairly
  • You agree if there are any ongoing payments between you and if so how much, for how long and the factors for this to change

Any agreement reached through mediation can be made into a legally binding agreement – including a clean break consent order if you both agree.

Can I refuse to do financial disclosure on a divorce?

You will be invited to do a voluntary disclosure of all your assets. If you do not wish to do this, then family mediation would not be a suitable method to resolve your dispute. In such cases the matter is likely to go to court and they will request you complete a Form E and sign it to say it is accurate. If you do not do this, then the court can make a judgement based on what assets they believe you have, which could be more costly to you than if you had made a full financial disclosure.

Where can I find out more information?

You can also call Mediate UK – 24 hours per day / 7 days per week or book in a free 30-minute consultation. Our number is 0330 999 0959 and our email is admin@mediateuk.co.uk.

Find out More about Financial Disclosure and Mediation

Read our: The Ultimate Guide to a Financial Consent Order