Abusive relationships can take many forms. One sure sign of abuse in a relationship is when one partner tries to hide money or assets away from the other - often as a way to retain control and power in a relationship. This is called “financial abuse” or “economic abuse.”
In many cases, this deceit is not uncovered until separation proceedings commence and you’re negotiating a property settlement and/or parenting matters. In all family law cases, each party has a “duty to disclose” and it’s important to know what this means for you and your family situation.
So, if you are finding yourself in this situation or you suspect your partner may be hiding money or assets away, what can you do, what are your rights and why is financial disclosure so important?
What is financial disclosure and why is it important?
In all family law matters, there is what’s called a “duty of disclosure.” This basically means that all parties involved in the separation and property settlement negotiations have a duty under law to disclose all financial transactions, assets and gains relevant to the case.
Some examples of financial documents considered relevant in a property settlement, can include (but are not limited to):
- Tax returns
- Bank statements
- Pay slips
- Superannuation statements
- Centrelink documents
- Child support assessments
- Certificates of title
- Mortgages
- Land appraisals or valuations
- Leases
- Loan applications or agreements
- Insurance policies
- Share certificates
- Trust deeds
- Business, partnership or company documents.
It can be heartbreaking for you to find out your partner has been hiding money from you. When trust in a relationship is lost, it can be incredibly hard to get back (see ‘signs of financial abuse’ to learn more).
Our Sydney family lawyers often hear from their clients in family law matters that they realised the relationship was over the moment they found out assets were being hidden from them.
So, what do you do? Engaging an experienced family lawyer is an important first step. If you bring the financial abuse to your partner’s attention without first seeking legal advice, it can possibly give them leeway to try to hide away the assets or attempt to destroy evidence of the proposed financial abuse without your knowledge.
What are the penalties for not disclosing?
In some cases, a former partner might simply refuse to provide any documents at all, which can be a huge red flag. This could potentially mean they are trying to cover up large transfers of money in accounts held in their name only.
There are various options within the family court rules and procedures to deal with these kinds of situations.
In the face of non-disclosure, our Ivy Law Group Sydney family lawyers may advise you to consider the following:
- Writing to the “non-disclosing” party what actions may be taken if the failure to disclose continues;
- Commencing Court proceedings in order to take advantage of the various tools available once in Court;
- Seeking specific orders about disclosure as early as possible in the Court proceedings;
- Seeking a matter is relisted for further directions if the failure to provide financial disclosure will hinder a future Court event;
- Seeking that the “non-disclosing” party’s case is dismissed or that their evidence is not received by the Court; and
- Seeking costs, potentially even on an indemnity basis in particularly serious cases.
If your partner is refusing financial disclosure, it’s important to seek advice from a qualified family lawyer as soon as possible.
There are severe penalties for not disclosing, including (but not limited to):
- legal cost orders
- penalties
- adverse findings on credit
- refusal by the Court to accept non-disclosed documents into evidence
- a significant shift in entitlements in the other party’s favour
- contempt of court charges or even dismissal of the case.
It is also important to remember that financial disclosure is an ongoing process not a once off event.
Financial abuse and separation: what do I need to know?
Recognising there is a problem is the first step to removing yourself from a financially abusive relationship.
If you feel that:
- your partner has not been completely honest with you about your finances;
- you are not altogether sure of your financial situation;
- you have been kept in the dark about particular financial issues and now things just aren’t adding up; or
- there are complex company, business or trust issues surrounding your financial affairs;
It is recommended that you speak to a Family Law Solicitor and take advice about steps to be taken prior to notifying your partner of your intention to separate.
It is not unusual that the only way to uncover hidden assets or obtain financial disclosure from a former partner is to have a qualified family lawyer issue family law proceedings.
In family law cases, each party has a duty to disclose. Once proceedings are issued in court, a further duty of disclosure exists whereby each party needs to complete a ‘Financial Statement.’ The Financial Statement details all known assets, liabilities and financial resources of both parties. This duty to disclose also includes details of any sale or gifting of assets made in the year immediately prior to separation, or since separation.
Once you have received a copy of your former partner’s financial statement, it’s up to you and your family lawyer to thoroughly examine the statement for inconsistencies or illogical entries. During this process, your family lawyer may request a particular document from your former partner’s family lawyer that was not disclosed in the Financial Statement. Your family lawyer can also obtain information through ASIC and Land Title Searches.
Gathering evidence of financial abuse
If your former partner is still being uncooperative, that is where your family lawyer can advise of other ways that evidence can be gathered. These can include:
- issuing Subpoenas
- issuing a Notice to Produce or Notice to Admit
- requesting ‘Answers to Specific Questions’
- gathering a list or affidavit of documents
- undertakings
- appointing a forensic accountant to investigate further.
To learn more about how each of these Court processes can support you in your family law case, and the role they play in assisting with financial disclosure, visit our section on ‘Family Courts and Processes.’
For further information about the legal process you need to follow after a separation, see our ‘separation checklist.’
Financial disclosure in child support matters
When it comes to financial disclosure in child support matters, the process is handled slightly differently.
Unless you reach an agreement with your former spouse or de facto partner about child support with a Binding Child Support Agreement, child support is an issue dealt with through the Department of Human Services. See our section on ‘child support’ to learn more.
It has been found that in matters of child support, there have been instances where financial abusers may use child support as a way to continue to financially abuse their former partner – employing a variety of strategies to reduce or avoid child support payments. These could include tactics such as: quitting their job, declaring bankruptcy, working cash in-hand, minimising their income under their own or their family business or hiding income and assets in bank accounts and investments – to name a few.
In some instances where The Department of Human Services is unable to recover money owing, one of our Sydney family lawyers can assist by advising the ways in which hidden income can be uncovered through a forensic account and/or investigators, and provide this evidence to the Child Support Agency.
What if I discover financial abuse but want to stay and work on the relationship?
Discovering financial abuse in your relationship can be particularly heartbreaking. A loss of trust can be incredibly damaging to a relationship, and hard to get back. However, if you’re not ready to leave and want to stay and work on the relationship, there are avenues available to help you and your partner get back on track, and to protect yourself financially going forward.
- Attending Mediation, Counselling or Arbitration as a way to work through your financial matters and come to an understanding about money as a couple. Communication is one of the most important tools of a healthy financial relationship.
- Seeking the advice of a qualified financial planner, accountant or family lawyer to discuss legal ways to protect yourself and formalise any agreements you may make with your partner or spouse.
- Through a Binding Financial Agreement (see below for more information).
How do I protect myself financially when entering a new relationship?
Being informed about your financial situation from the beginning of your relationship is a must. One such way in which you can protect yourself financially is through a Binding Financial Agreement (BFA). This is sometimes referred to as a “pre-nuptial agreement.”
A Binding Financial Agreement is a legal document that states how your assets, financial resources and liabilities will be divided if your relationship breaks down. It can be entered into before, during and even after a relationship has ended. More information on this topic can be found under our section on ‘Money and property matters.’
People enter into a Binding Financial Agreement for many different reasons. You may want to do it in order to protect your children from a previous relationship, or you’ve entered a new relationship with many assets to your name and want to protect them. Whatever the reason, it can often be a delicate subject and so it’s important to approach the subject carefully so as to not cause harm to or strain the relationship before it’s even started.
Our Sydney Family Lawyers have extensive experience across all areas of family law, in particular, Binding Financial Agreements, and can provide the right advice for your unique financial situation.
A final note on financial disclosure
Financial disclosure is an important part of the Courts and family law process. In fact, in all family law cases you must sign an undertaking that you understand your obligations to disclose all relevant information. So, it’s important that you understand exactly what it means, what your duty is with regards to the law and what your rights are if a former partner refuses to disclose.
If you feel that you may be the victim of financial abuse or would like advice on how to protect yourself financially, contact one of our Sydney family lawyers on (02) 9262 4003 for a confidential discussion or submit an online enquiry.
The content of this article is intended as a general guide to the subject matter. For specific legal advice about your individual circumstances, please contact our experienced lawyers.
Shane leads Ivy Law Group’s Family Law team and has a reputation as one of Sydney’s leading divorce lawyers.
Shane can help with all aspects of family law, including relationship breakdowns, children and parenting matters, financial agreements and property settlements for married and de facto couples.
