There are more than 90,000 divorces every year in the UK, each costing approximately £14,000 in fees on average. However, it is also estimated that many divorcees could be losing out on thousands of pounds in cash and other assets due to unreliable figures and information that is hidden by the other party.
According to Steve Hale, Partner of Perrys Chartered Accountants, although fraud in divorce is rare, many assets can be hidden. He said:
“Assets include things such as cash, bonds, insurance policies, stocks and annuities. If one spouse has a greater knowledge of the marriage’s overall financial position, then it is easier for them to hide this information from the other person.”
What are the red flags for dishonesty in divorce?
These are some of the ways to spot whether your spouse might be trying to hide information from you:
1. They’ve changed information on joint accounts without your knowledge – for example, updating passwords
2. Unexpected or unexplained cash withdrawals
3.Loaning or giving away money to family and friends, especially if the amount is large
4.Transferring property or assets to family members without a genuine reason
5. A ‘sudden’ drop in income
6. If your spouse has their own business and suddenly declares a reduction in the value of the business or changes its structure
However, while you might suspect your spouse of being dishonest, it could be difficult to prove anything without the help of a forensic accountant.
What is a forensic accountant?
“A forensic accountant analyses financial documents to uncover discrepancies or hidden assets and ensure that there is a fair financial distribution in a divorce,” says Steve. “This could include exposing unrelated businesses that have been set up to conceal incomes, uncovering overstated liabilities or revealing that profits have been downplayed.”
Following an investigation, a forensic accountant will provide their findings to a divorce solicitor so that these can be looked at in further detail.
However, forensic accountants aren’t just for determining whether a spouse is acting fraudulently in a divorce. They can also be used to provide professional valuations on assets and income, determine the correct child support amount, perform business valuations and assist solicitors in finding out other information necessary for ensuring an equitable outcome.
“The important thing with any divorce, especially ones involving high net worth individuals, is to ensure that financial information is current and correct. This is the only way to guarantee that there is a fair and reasonable settlement for both parties.”