Hiding assets after separation can make it difficult to reach a fair property settlement because both parties need an accurate understanding of the financial position.
That can become difficult when one person suspects that their former partner is hiding assets after separation, or not disclosed all of their assets, income or financial interests.
The concern may arise because money appears to have been moved from an account, a business interest is being understated, an asset has been transferred to another person or there are financial arrangements involving companies, trusts or family members that are difficult to understand.
Sometimes there is an innocent explanation. In other cases, further investigation may reveal assets or financial interests that have not been properly disclosed.
Australian family law imposes significant disclosure obligations on parties involved in financial matters. If there is reason to believe the financial picture being presented is incomplete, there are steps that can be taken to investigate the position.
What is financial disclosure in a property settlement?
Parties to a property settlement are required to provide information about their financial circumstances.
The Federal Circuit and Family Court of Australia describes this as a duty to provide full and frank disclosure. In financial proceedings, that duty extends to a party’s total direct and indirect financial circumstances.
This is broader than simply providing a list of assets held in one person’s name.
Depending on the circumstances, disclosure may include information about property, bank accounts, investments, superannuation, liabilities, income, companies, businesses, trusts and other financial interests.
The obligation is ongoing. If a person’s financial circumstances change or further relevant information becomes available, additional disclosure may be required.
What can hidden assets look like?
Hiding assets after separation does not always involve money being deliberately concealed in an undisclosed bank account. In practice, concerns about non-disclosure can be considerably more complex.
A person may have an interest in a company or trust that has not been properly explained. Money may have been transferred to a family member or related entity. The value of a business may be disputed, or a party may appear to be retaining earnings within a company rather than receiving them personally.
There may also be questions about loans between family members or related entities, recently acquired or disposed of assets, cryptocurrency, investments, interests held overseas or financial arrangements that do not appear on an ordinary bank statement.
Not every complicated financial arrangement represents an attempt to conceal property.
The issue is whether the parties’ true financial circumstances have been properly disclosed and can be understood.
What if an asset is not in your former partner’s name?
Legal ownership is important, but it is not necessarily the end of the enquiry in a family law property matter.
A person’s financial circumstances can include direct and indirect interests. The disclosure obligations in financial proceedings expressly extend to relevant financial circumstances that may be held through other structures or arrangements.
This can become particularly important where family trusts, companies, partnerships or related-party arrangements are involved.
For example, simply establishing that an asset is owned by a company does not answer every question about its relevance to the property settlement. It may also be necessary to understand the ownership and control of the company, its value, the parties’ interests in it and the financial benefits derived from it.
The same caution applies to trusts. The existence of a trust does not automatically determine how its assets will be treated. The trust deed, control of the structure, the parties’ interests and the way the trust has operated may all require consideration.
This is one reason property settlements involving businesses and family structures can require a more detailed financial investigation.
What if money has been transferred to family or friends?
A transfer of money or property before or after separation may warrant closer examination, particularly where the amount is substantial or the purpose of the transaction is unclear.
The fact that money has been transferred does not necessarily mean it has been concealed.
There may be a genuine repayment of a loan, payment of an existing liability or another legitimate explanation. However, where a substantial transfer is inconsistent with the parties’ previous financial arrangements or occurs around the time of separation, it may be necessary to understand why it occurred and whether the recipient is expected to retain the money.
Relevant evidence can include bank records, loan documents, correspondence, accounting records and information about the relationship between the parties to the transaction.
The objective should be to establish what actually occurred rather than assume that every unusual transaction is evidence of wrongdoing.
How can you find out whether assets are being hidden?
The appropriate approach depends on the nature of the concern.
The disclosure process itself may identify inconsistencies or lead to requests for further documents. Bank statements, tax returns, financial statements, company records, trust documents and records concerning particular transactions can help build a clearer picture of the parties’ financial affairs.
Where the information provided is incomplete, further disclosure can be sought.
In court proceedings, formal mechanisms may also be available to obtain relevant evidence. The Court provides for the use of subpoenas requiring a person or organisation to produce documents or, in some circumstances, give evidence.
Information may therefore be obtainable from third parties such as financial institutions, accountants or other people or entities holding relevant records, where the procedural and legal requirements are satisfied.
In more complex matters, forensic accounting or valuation evidence may also be required to understand company structures, trace transactions or assess the value of business interests.
The investigation should remain proportionate to the issues involved. A targeted enquiry based on identifiable concerns is generally more useful than assuming that every unexplained transaction indicates concealed wealth.
What happens if your former partner does not provide financial disclosure?
A failure to comply with disclosure obligations can have serious consequences.
The Federal Circuit and Family Court of Australia states that a failure to provide full and frank disclosure may result in consequences including costs orders, a refusal to allow a party to rely on particular information or documents, contempt proceedings and, in some circumstances, the setting aside of orders.
Non-disclosure can also affect the Court’s assessment of the evidence.
A party should therefore not assume that withholding financial information will simply prevent the other person or the Court from taking it into account.
Where disclosure appears incomplete, the appropriate response will depend on what information is missing, its significance and whether there is evidence suggesting that the omission is deliberate.
Can a property settlement be reopened if hidden assets are discovered later?
Potentially, although final property orders should not be approached on the assumption that they can simply be reopened if further information emerges.
The Family Law Act 1975 (Cth) provides circumstances in which the Court may set aside a property settlement order. These include circumstances involving a miscarriage of justice by reason of fraud, duress, suppression of evidence or the giving of false evidence.
Whether those requirements are satisfied depends on the particular circumstances.
This is one reason proper disclosure before a property settlement is finalised is so important. Identifying and addressing concerns at that stage may avoid the significantly more difficult position of attempting to revisit final orders later.
Different considerations can arise where a settlement has been documented by a financial agreement rather than court orders, and advice should be obtained about the particular arrangement involved.
What if you only have a suspicion and no proof?
It is not unusual for a person to know that something about the financial position does not appear right without having evidence that an asset has actually been concealed.
That does not mean allegations should be made without a proper basis.
The more useful starting point is usually to identify what has created the concern. There may be an unexplained reduction in cash, inconsistencies between income and expenditure, unfamiliar transactions, missing company records or a sudden change in the way a business or trust is operating.
Those issues can then be considered against the financial disclosure that has been provided.
A structured approach is particularly important in high-value property settlements. Unfocused allegations can increase conflict and cost without improving the understanding of the financial position. Equally, a material inconsistency should not be ignored simply because the relevant asset or transaction is difficult to trace.
Should you access your former partner’s private accounts or records?
Concerns about hidden assets do not give a person an unrestricted right to access their former partner’s private information.
It is important to distinguish between documents that are already lawfully in your possession and information obtained by accessing accounts, devices, emails or records without authority.
If you believe relevant financial information is being withheld, legal processes are available for seeking disclosure and, where appropriate, obtaining information from third parties.
Obtaining advice before attempting to access material yourself can help avoid creating separate legal or evidentiary problems while trying to investigate the financial dispute.
Why early advice can matter
Concerns about undisclosed assets are often easier to investigate when the relevant transactions and financial records can still be identified.
Obtaining advice early can help determine what disclosure should be requested, which inconsistencies are significant and whether further investigation is proportionate to the value and complexity of the matter.
In cases involving businesses, trusts or related entities, it may also help identify when accounting, valuation or other expert evidence is required.
The objective is not simply to search for hidden property. It is to establish an accurate financial picture so that the property settlement can be considered on a properly informed basis.
Advice on non-disclosure and complex property settlements
Mazzeo Lawyers advises clients in high-value and complex property settlements, including matters involving businesses, companies, trusts, substantial asset pools and concerns about incomplete financial disclosure.
Where there is reason to believe that assets or financial interests have not been properly disclosed, we consider the available financial information, identify areas requiring further investigation and advise on the appropriate steps for obtaining additional evidence.
Our approach is to ensure the investigation remains focused on the issues that can materially affect the property settlement, while taking further action where the circumstances require it.
If you are concerned about hiding assets after separation, or believe your former partner has not disclosed the full extent of their financial position, obtaining advice early can help determine what information should be sought and how those concerns should be addressed.
