Full and frank disclosure of financial matters by couples who are separating is the key to avoiding the stress, effort and costs associated with a delayed property settlement. The RMB Family Law division explains.
When married or de facto couples separate and a property settlement is required, the parties have a duty to provide one another with what is referred to as “full and frank financial disclosure”.
Engagement by both parties in this process is key to a timely and cost-effective settlement.
They must disclose all information regarding their financial circumstances. This includes all sources of earnings, interest, income, property and other financial resources, whether these are owned by the party directly or go to some other person or are held in a structure such as a company or a trust.
Relevant financial information includes that recorded in paper documentation or stored on an electronic device. It even includes information that the other party to the property settlement may not know about.
Financial disclosure can include but is not limited to superannuation statements; copies of statements from bank, building society and/or credit union accounts; copies of statements for any credit cards or any other personal debt; copies of payslips, tax returns and assessments; details and records of any investments such as stocks and shares; details of assets and any valuations or appraisals obtained for these assets; and details of interests in any company and/or trust and supporting financial documentation.
The duty of disclosure is also an ongoing obligation, which means that a party must continue to provide financial information as their circumstances change. Each party also needs to disclose information about property that they have disposed of or sold in the 12 months prior to separation and since the date of final separation.
It is vital that parties engage in full and frank financial disclosure to ensure that the property settlement process is completely transparent, and the asset pool is accurately identified and valued.
This allows both parties to make fully informed decisions and engage in property settlement negotiations with absolute clarity regarding each other’s financial circumstances.
Separated parties that fail to cooperate with one another in the disclosure process may experience a drawn-out property settlement, which could be potentially more expensive to finalise. The commencement of legal proceedings is also a potential consequence of one party’s lack of engagement in the disclosure process, which can be a costly exercise for all involved.