Disclosure: What, when and why?
In the context of a property settlement, “disclosure” means the process of both partners disclosing to each other their full financial circumstances.
Disclosure can be a complex area of law, and it is important that you obtain professional advice to ensure you fully understand your obligations. To get you started, below is the “What, When and Why” of disclosure.
What do I need to provide?
It will depend on the facts and circumstances of you case, but in a nutshell, you will need to provide all of the documents necessary to understand your financial circumstances (including your direct financial circumstances and your indirect financial circumstances).
This includes your income, expenses, assets, liabilities, superannuation, and financial resources. If you or your partner has an interest in a business, a trust or company, an inheritance that is expected to be received imminently, or an investment opportunity about to come to fruition, all relevant documentation and information pertaining to these will need to be disclosed. Examples include:
When do I need to provide my disclosure?
The timing of disclosure will be different in in each case. The most important time to ensure that you and your partner have complied with your duty of disclosure is before you negotiate and/or agree to any deal.
It is important to understand that both you and your partner have an ongoing obligation to disclose your financial circumstances. In other words, you cannot provide your disclosure documents once and then refuse to update your disclosure as time goes by, whilst negotiations or court proceedings occur. For example, if your income changes, if you buy/sell a property, if you receive an inheritance, if your bank accounts change, this must all be disclosed.
If you have been unable to reach an agreement and either you or your partner want to commence Court proceedings, there are specific Court Rules about disclosure, and you need to ensure that you adhere to those Rules. There are serious consequences (including financial) if you don’t.
Why do I need to provide disclosure?
- You need to fully understand the asset pool and the deal you are negotiating. How can you assess the deal and know if it is in your interest to agree to it if you do not understand the full financial picture?
- Your partner also needs to understand the asset pool and the deal.
- Your lawyer needs to be able to ensure that all of the ‘i’s are dotted and the t’s are crossed’. How can this be done if your lawyer does not understand the asset pool and the deal? Similarly, how can your lawyer provide you with advice on the deal if he/she does not know the full financial circumstances of the couple?
- If, after a property settlement has been entered into, it comes to light that a party has not fully disclosed his/her financial circumstances, there is a risk that the other partner may make an Application to the Court to have the property settlement set aside. Not only will you potentially lose the deal, you may end up with a worse settlement and an order that you pay your partner’s legal fees of the proceedings. Not to mention the time, stress, cost, and uncertainty of litigation.
If you’re thinking about getting started, or if you want to know where you stand, call us on 07 3236 4504 to make an appointment to discuss.