When a marriage or de facto relationship ends and a property settlement is required, the need to understand what financial disclosure means for you and your former partner, is key to enabling you to resolve your matter.
What is financial disclosure?
During a marriage or de facto property settlement process, each party is required to provide to the other, copies of all information and documents that are relevant to their property settlement.
Documents are considered ‘relevant’ if they:
- Verify the nature and extent of the assets, liabilities and financial resources of one and/or both of the parties (often referred to as ‘the asset pool’) that will be the subject of division of the parties including:
- Assets and liabilities held in each party’s separate and/or joint names;
- Assets and liabilities held within any companies or trusts in which either or both parties have an interest;
- Verify the nature and extent of the current and any future income parties including income:
- from employment; and
- from other sources such as a company or trust;
- Relate to an issue in dispute in the property settlement (i.e. if the document/information could prove or disprove an issue in dispute) which may include:
- The contributions each person has made to the asset pool;
- Factors relating to what each party may ‘need’ to support themselves in the future often referred to as ‘future factors’.
There’s a process that the Court will normally follow to identify the asset pool, the income, contributions and future factors of separated couples. You can learn more about what is involved in that process in the related articles listed at the bottom of this article. However, central to this process is the exchange of documents and information between separated couples to ensure transparency.
What documentation is required?
Generally, the types of documents that both parties need to produce include:
- Evidence of income (3 most-recent pay slips);
- Last 3 tax returns;
- Bank statements for the 12 months prior to separation to the current date (including accounts in the sole name of each party or in which a party holds jointly with another person);
- Documents to verify any interest in a trust or company (including trust deeds, any variations to those deeds, tax returns for the trust/company for the last 3 financial years; financial statements [i.e. balance sheet and profit and loss] for the last 3 financial years; bank statements for all accounts [transaction and/or loan] held by the trust/company for the 12 months prior to separation to the current date);
- Current superannuation fund statement;
- If super is self-managed, the trust deed and financial statements for the fund for the last 3 financial years;
- Documents to evidence any assets disposed of or sold in the 12 months prior to separation;
- Documents that provide evidence of any inheritance, gift from a family member or friend, a redundancy payment, personal injury award or lottery winnings (including documentation to verify the receipt and application of the asset/funds);
- Documents to evidence any future asset transfer or income that is likely to come a party’s way (for example, share options, trust distributions, inheritances); as well as
- Documents that verify both people’s financial position when they began living together (e.g valuations or purchase documents for assets owned, bank statements to demonstrate savings held or superannuation statements to prove entitlements at the time parties began living together).
While this list is not exhaustive, the idea is to gather as many documents as possible to verify the nature and extent of the asset pool, and the nature and extent of the contributions made during the relationship, including from the time that you have been separated for.
What if I (or my former partner) do not disclose everything?
If either your or your former partner refuse to provide disclosure of relevant documents, and your matter eventually comes before the Court, the consequences may be that the Court could:
- make an order for the person who has failed to provide disclosure (‘the non-disclosing party’) to pay the legal costs of the other party (in full or in part);
- refuse to allow the non-disclosing party to rely on a document if it has not been previously disclosed to the other party;
- Stay (i.e. place on hold) or dismiss all or part of the non-disclosing party’s application;
- Find the non-disclosing party guilty of contempt of Court and issue a punishment of a fine or a term of imprisonment (although this is rare and only in extreme circumstances);
- If non-disclosure is only revealed after the Court makes a final property settlement Order, the Court may set aside the Order (even if the non-disclosure is discovered several years later).
If your former partner is withholding documents, and your matter is before the Court, there are processes via the Court rules that your family lawyer can pursue on your behalf to obtain the missing documents from your former partner (or third parties). Such examples include but are not limited to:
- Filing an application in the Court (supported by an affidavit) to seek an order for the other party to produce the documents;
- Filing a subpoena to a third party to obtain copies of the documents;
- Sending a notice to the other party to produce the documents;
- Sending a notice to admit facts to the other party; and/or
- Sending a notice to a third party (not involved in the property settlement) to provide the documents.
Your family lawyer will need to take care in determining what is the best approach to obtain missing documents because there can be serious consequences for you if the above tools are not approached with the right attention and strategy for your case overall.
Managing your property settlement effectively
The idea in negotiating a property settlement is that both parties should come to the table ‘with their cards facing up’ so that decisions can be made from a fully informed place. Full and complete disclosure of all relevant documents is required to maximise the opportunity for an amicable and early resolution of the property settlement. The absence of cooperation in the disclosure process slows down the settlement process making it potentially more expensive to finalise.
If you and your former partner have separated and are having direct discussions, it is helpful to exchange all documentation upfront. If everyone has the information they need and there are few or no questions about the history of the relationship and what the current asset pool is, both parties can save themselves significant stress, time, effort and costs.
Related Articles: Why can’t you give me a precise answer about my property entitlement?
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Disclaimer: The content in this article provides general information however it does not substitute legal advice or opinion. Information is best used in conjunction with legal advice from an experienced member of our team.