An issue often faced in divorce proceedings is the dissipation of assets. This basically means wasting or hiding marital assets to prevent the spouse getting their share of it in a financial settlement. On a higher level, it can mean the more calculated act of hiding assets whether by transferring an asset to another person or placing funds in foreign accounts or in the names of third parties. This is particularly common in respect of gold jewellery, artwork and contents of safes going “missing”. In such situations, it is very hard to prove the position as often, there is no evidence available.
A person is demed to be dissipating assets by wasting the asset. For example if your spouse is gambling or funding an addiction, the funds can reduce quite quickly. It can also be hard to make the distinction between expenditure due to lifestyle and expenditure to thwart a financial claim. It is important when a divorce commences to keep an eye out for any suspicious behaviour. Unusual spending such as frequent trips abroad or weekends away are good indicators. If you have recently sold a property and then been told your marriage is over, it is very important to act fast to safeguard those sale proceeds.
If you suspect that your spouse is transferring assets or monies out of his/her sole name to thwart your claim, you will have to act fast. You can apply to the Court to freeze your spouse’s assets. The extent of the Court Order depends on the severity of the conduct and the evidence that you have to support your application.
When dealing with properties and transfers to third parties, the court also has the power at an interim stage to order a transfer to be set aside where you can prove that the transfer has been completed with the intention of defeating a financial settlement arising from a marriage. However, the Court cannot order a transaction to be set aside if someone bought the asset from your spouse in good faith without knowing their motive. A further difficulty is proving that the transfer was intended to frustrate your financial claim. This is especially difficult if the transfer took place more than 3 years prior to the breakdown of the marriage then
Given the serious nature of the Order i.e. locking an individual out of their funds or setting aside a property transfer, the courts require a lot of evidence. Simply having a feeling or being within ear shot of something is not sufficient. Unfortunately, you cannot use a freezing injunction as a means of obtaining disclosure to support your suspicions. Your application must be supported with evidence. However, this does not mean you start copying your spouse’s financial documents. This is a different area of law which is outside the ambit of this blog. However, there are serious implications for such a course of action.
In some instances, the courts will look at the overall value of the matrimonial assets. The courts will consider whether, despite the wrongdoing, there is enough in the pot to provide a fair outcome without the necessity of any interim application.
In cases where assets have been wasted, a judge can take a robust approach and provide a larger proportion of the matrimonial pot to the injured spouse.
The reality is that when your marriage breaks down, there will be many things that you have to think about. Unfortunately keeping an eye on your spouse’s financial conduct will be one of them.
If you feel that something is not right, it is always worth speaking to a solicitor. They can help you ascertain what steps you can take . We often hear from clients who have simply waited too long to take action as they were afraid of sounding silly or paranoid. If in doubt it is always worth getting specialist advice.
If you want expert advice when it comes to separation or divorce, please contact me, Hardeep Dhillon, at The Law House Solicitors on 020 3150 2525 . Alternatively, please email me at email@example.com