What is the Relevance of Financial Disclosure

When a couple separates, they need to sort out how to divide their property and assets. This can be a complex and stressful process, especially if one party is not fully aware of the other party’s financial situation. To ensure a fair and equitable outcome, both parties have a duty to provide full and frank disclosure of their financial affairs to each other and to the court. This article will explain what financial disclosure means, why it is important, and what are the consequences of failing to comply with it.

What is financial disclosure?

Financial disclosure is the process of providing relevant and accurate information about your income, expenses, assets, liabilities, and financial resources to your former partner and to the court. This includes any property or resources that you own, control, or have an interest in, such as bank accounts, loans, credit cards, properties, businesses, trusts, superannuation, etc. You also need to disclose any disposal of property that you made before, during, or after the relationship, such as selling, transferring, or gifting assets to someone else.

Financial disclosure is required by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, which set out the pre-action procedures and the duty of disclosure for family law matters. You need to start disclosing your financial information as soon as you initiate or participate in the pre-action procedures, which are the steps you need to take before starting a court case. You need to continue disclosing any new or updated information until your property settlement is finalised.

Why is financial disclosure important?

Financial disclosure is important for several reasons:

• It helps you and your former partner to understand your financial positions and to negotiate a fair and reasonable property settlement.
• It enables the court to make orders that are just and equitable, based on the true value and nature of the property pool.
• It reduces the risk of delays, disputes, and costs in the resolution of your matter.
• It demonstrates your honesty and good faith in dealing with your former partner and the court.

How do you provide financial disclosure?

You can provide financial disclosure by completing a Financial Statement, which is a sworn document that outlines your current financial circumstances, and by exchanging source documents with your former partner, such as bank statements, tax returns, payslips, valuations, etc. The specific types of documents that you need to disclose will depend on your individual situation, but you can find a list of common documents in Schedule 1 of the Family Law Rules.

You need to provide your financial disclosure to your former partner as soon as possible, and no later than 14 days before the first court date. You also need to file your Financial Statement with the court at least 28 days before the first court date, and update it whenever there is a significant change in your financial situation.

What are the consequences of failing to provide financial disclosure?

Failing to provide full and frank financial disclosure can have serious consequences, such as:

• The court may make orders that are unfavourable to you, based on the information that is available or on assumptions that the court may make.
• The court may order you to pay costs to your former partner or to the court, for causing unnecessary delay or expense.
• The court may impose sanctions on you, such as fines, contempt of court, or imprisonment, for breaching the court rules or orders.
• The court may set aside or vary the final property orders, if it is later discovered that you have hidden or misrepresented your financial information, and that this has caused a miscarriage of justice.

How can a family lawyer help you with financial disclosure?

Financial disclosure can be a daunting and complicated task, especially if you are not familiar with the legal requirements and procedures. A family lawyer can help you by:

• Advising you on what financial information you need to disclose and how to obtain it.
• Assisting you with preparing and filing your Financial Statement and exchanging documents with your former partner.
• Reviewing and analysing your former partner’s financial disclosure and identifying any issues or discrepancies.
• Negotiating and drafting a property settlement agreement or a binding financial agreement that reflects your financial disclosure and protects your interests.
• Representing you in court and advocating for your rights and entitlements, if your matter cannot be resolved by agreement.

If you are unsure about your financial disclosure obligations or your former partner is not cooperating with the disclosure process, you should seek advice from an experienced family lawyer as soon as possible. Contact our team of expert solicitors today to discuss your situation and find out how we can help you achieve a fair and satisfactory property settlement.