When a relationship ends, separating couples need to deal with a range of financial issues, often at a time when emotions are already running high. Most people understand the importance of being open and honest about their finances, but what happens when one person deliberately tries to reduce the assets available for a financial settlement? This is commonly described as financial misconduct.
Financial misconduct can take many forms. It might include deliberately hiding assets, transferring money to another person, selling property for less than its true value, running up unnecessary debts or spending substantial sums recklessly after separation. The consequences can be significant, particularly where the behaviour has affected the resources available to the family.
How can financial misconduct affect a divorce?
The court has considerable discretion when dealing with financial matters following divorce. Where one person’s financial behaviour has had a significant impact on the available assets, the court may take that behaviour into account when deciding what would be a fair financial settlement.
In some circumstances, money that has been deliberately dissipated may be treated as though it remains available for division. This is sometimes referred to as an “addback”. However, addback is not automatic. The circumstances, nature of the spending and evidence available will all be relevant.
Financial misconduct can also lead to increased legal costs, delays and further conflict. If one party suspects that assets have been hidden or deliberately dissipated, it may be necessary to obtain additional financial information or take legal advice.
Can mediation help?
Family mediation can provide a constructive way of addressing concerns about financial behaviour. At Hampshire Mediation, the process encourages both parties to provide full and frank financial disclosure. This allows each person to understand the overall financial position before discussing how assets, income, pensions and liabilities should be dealt with.
A mediator does not investigate allegations of financial misconduct or decide whether one person has behaved improperly. Instead, they can help the parties identify the issues, ask appropriate questions and explore possible solutions.
Where there is genuine disagreement about the legal consequences of financial misconduct, independent legal advice can be particularly important. Mediation and legal advice can work alongside each other, allowing couples to negotiate while ensuring that they understand their legal position.
The importance of openness
Trying to conceal or dissipate assets is rarely a sensible approach to separation. It can undermine trust, increase costs and potentially affect the eventual financial outcome.
By approaching mediation openly and honestly, separating couples have a better opportunity to understand their financial circumstances and reach a practical and informed settlement.
Hampshire Mediation can help couples navigate difficult financial discussions in a structured and constructive environment.