What is Financial Disclosure in a Separation and why is it so important?

What is Financial Disclosure in a Separation and why is it so important?

When parties separate and there is a pool of property to divide one of the first questions you will be asked is to provide financial disclosure. Your duty to provide full and frank disclosure in financial proceedings is identified in Chapter 6 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (see Rule 6.06).

This duty is to ensure that all information relevant to the proceedings is available to both parties, including information that one party might not know about. This obligation to the Court exists for the entirety of the matter, from pre-action procedure to finalisation. As a party, you must continue to provide updated information as more documents come into existence or circumstances change right up until your matter is finalised.

What is Full and Frank Disclosure?

You will be asked to provide “full and frank disclosure” when providing your financial disclosure, what does this mean? Full and frank disclosure includes producing an honest and accurate view of all sources of earnings, interest, income, property and other financial resources that are held in each person’s separate or joint names as well as any companies or trusts to which a party has an interest. By providing disclosure, you are verifying the extent of all assets and liabilities available for division. You cannot determine what piece of the pie you receive until you determine how big the pie is, as such disclosure needs to occur.

When filing your Court documents you will be expected to file a Financial Statement, which in essence is a financial summary of all the information you have and will disclose to the other party in one document. You will also be expected to file an Undertaking as to Disclosure which states you have read all the relevant rules and are aware of your duty to the Court and have met such obligation.

The importance of being truthful within these documents cannot be understated, failing to file an Undertaking or filing a false Undertaking can lead to penalties which include fines or a short term of imprisonment.

Negotiating a property settlement should be done so by parties who have been completely honest, this ensures decisions are made from an informed base. By adhering to your disclosure requirements, you are maximising both time efficiency and costs.

Navigating the complexities of separation and property division requires the guidance of an experienced Family Law solicitor. With offices across Sydney, our dedicated team is here to assist – contact us today at (02) 9523 5535 or at info@southernwaters.com.au.