A landmark case will land in the Supreme Court in Britain which may set a precedent for any person who is contemplating hiding assets during divorce proceedings. Two divorced women have joined forces to sue their ex-husbands for lying about their true wealth and awarding low settlements.
Alison Sharland was awarded £10 million pounds when she divorced from entrepreneur Charlie Sharland, while Varsha Gohil received £270,000 and a car from her ex-husband Bhadresh Gohil. However Sharland believes that the true wealth of her husband is £150 million. It has since emerged that both men lied about their wealth during their divorces. This case could set a precedent that would expose spouses hiding assets and require them to pay.
In the appeal of the case, Sharland claims he told her his shares were worth about £7 million, whereas press reports suggested the company, of which he has a controlling interest, could be floated on the stock market for more than £460 million.
Mrs Sharland had based her agreement on the value of the shares being no more than £32m and on her husband’s evidence that the company would not be floated on the stock market until about five or seven years later. But it soon emerged that he had misled her and had actually been in the process of planning an initial public offering of the company as he was in the witness box, the court heard.
Reports suggested the price could be more than $750m (£460m), which would mean Mr Sharland’s shares were worth at least £132m after tax.
Mrs Sharland took her case to the Court of Appeal after family judge, Sir Hugh Bennett, despite finding Mr Sharland’s evidence to have been “dishonest”, refused to re-open his ex-wife’s financial claims.
One leading divorce law firm in England now employs a financial forensics team to track down assets that have been hidden, usually in a labyrinth of offshore accounts and companies. Other methods of hiding assets are converting cash into antique office furnishings, cars, yachts and paintings.
British banker Scot Young hid hundreds of millions of pounds from his estranged wife, Michelle and was eventually jailed for contempt of court when he failed to disclose the whereabouts of the assets.
In the United States, the National Endowment for Financial Education (NEFE) released figures which suggest that nearly 60% of those they surveyed admitting to hiding assets from their spouse, and more than half admitted to hiding a major purchase from their spouse. There, it is illegal to lie about your income or assets during divorce proceedings but there are some well-worn paths to getting around the law. Forbes magazine lists some of these strategies, including overpaying tax and getting a refund after the divorce is finalised, creating phony debt or deferring the payment of bonuses.
In Australia, a 56-year-old physiotherapist from Sydney’s southern suburbs, facing divorce proceedings, was caught trying to deceive his estranged wife into thinking his practice was worth much less than its real value. But the physiotherapist was exposed when the wife’s solicitor hired a private detective to pose as a customer and visit the husband’s practice for some back rubs. The trial judge decided the husband was trying to conceal his true income and gave him less than 10 per cent of the family home.
The Family Law Act requires full and frank disclosure of the financial affairs of both partners who have to swear an oath and set out a complete statement of income, expenses, assets, financial resources and liabilities. Of course, this doesn’t guarantee complete honesty and it often takes the expertise of a family lawyer to track down any deception.
Hiding Assets is Never a Good Idea
It is recommended that you make your property settlement with the advice of a lawyer and that you make it legally binding. As in the example above, it can be hard to determine what you are entitled to and what a fair property settlement looks like without the advice of someone who knows the law well.
It’s actually pretty common for people who are considering divorce not to know exactly what their assets and liabilities are. Perhaps this is because one partner has always done all the finances, or because it’s too complex to understand. However, to make sure your financial settlement is fair, you’ll need to know exactly what you own and what you owe. Some of your basic assets and liabilities can include:
- Real estate
- Money in banks and in cash
- Any investments (including shares)
- Any inheritances
- Superannuation for both
- Debts like mortgages
- Credit cards
- Personal loans and store cards
- Cars, jewellery and everything that makes up the family home and lifestyle
If you are considering separation or divorce and have concerns about the financial side of proceedings, please contact our experienced family lawyers today. We offer a FREE 10-minute phone consultation. Contact us today.