Your financial disclosures

Preparing your Form E

form_eForm E can be a daunting and uncomfortable document, even in comparatively straightforward cases, requiring details of all your private financial affairs. For most people, gathering all the appropriate documentation and completing the Form’s 28 pages will be very time consuming.

Good financial awareness and meticulous preparation is vital to ensure that the Form is compiled properly and appropriately and best able to stand up to scrutiny. We will discuss presentation of the key disclosures and possible alternatives, how those disclosures might impact on an eventual settlement and what opportunities there might be for “ring-fencing” particular assets, particularly if these were acquired prior to the marriage.

Whilst you take ultimate responsibility for Form E and have to certify its truth, we can “project manage” its preparation – which may be helpful for busy people.  Alternatively we can help with just the Form’s most complex aspects, e.g. your business’s value, your future needs or your financial contribution to the marriage.

We use electronic documents and email extensively to enable a speedy flow of documents between us. Our high-speed scanners convert original documents to pdf files for easy distribution. To keep the costs down there may be quite a lot you can do yourself.

The financial part of Form E breaks down into 12 parts, as follows. It’s fair to say that many of the disclosures can be a minefield.

  • Property and personal assets
  • Liabilities and tax
  • Business assets and company directorships
  • Pensions
  • Other assets
  • Income (earned)
  • Income (self-employed or partnership)
  • Income from investments and Other income
  • Income and capital needs for you and children

Listing and valuing your assets and liabilities

question_markEveryone’s schedule of assets and liabilities will be different and might vary in complexity; for example from simple bank balances to invested share options and to capital tied up in family trusts.

A host of questions might arise which would need careful consideration e.g.:

  • How do I value property, cars and possessions? Insurance value or eBay value?
  • How do I deal with gifts and loans to and from my family?
  • Pension disclosures – what is actually required and what do the questions mean?
  • How do I deal with recent changes in the stock market?
  • Should I estimate my tax liability?

Business interests. If you have business interests, that adds further complexity and is dealt with separately. Click here.

Disclosing your income

money_pounds_1Sources of income vary between individuals and might include one or more of the following sources:

  • Earnings from employment, under PAYE
  • Complex remuneration packages, which include shares, awards, options, discretionary bonuses, benefits in kind, company pension contributions
  • Drawings from business or partnerships
  • Dividends from companies
  • Property rentals
  • Investment income

If your earnings are less than straightforward we can advise you on the disclosures.

‘Needs Budget’ – determining your income and capital needs

Form E requires you to estimate your future financial needs, i.e. what income is needed to cover your reasonable outgoings going forward. This is an important budgeting exercise as it forms the basis for potentially torturous arguments over future spousal maintenance.

credit_cardsNeeds budgets often suffer from being just ‘finger in the air’ estimates; based on guesswork rather than facts, unrealistic and sometimes bordering on fantasy.   Budgets such as these do not stand up to scrutiny and will be largely dismissed.  We advise clients to pay close attention to the detail of your current and expected expenditure. We like to reference the budget to actual spending patterns and to create a robust spreadsheet model which truly reflects the current and anticipated future spend for you and for your children.

Having established accurate projections as to what your outgoings are likely to be, it is easier to argue what maintenance would be required to meet a shortfall or, conversely, what level of maintenance is reasonably affordable should you be the one being asked to pay.

Because this work is all spreadsheet-based it is simple to refine the numbers until you are happy with the outcome. And, as a result of this work, not only do you end up with a realistic, defensible Needs budget, but the budgeting exercise itself helps crystallise the financial plans of your independent life after divorce.

Financial contributions to the marriage – collating evidence for and against

In long marriages, where assets exceed both parties’ individual needs and the needs of any children, current legal practice is that the theoretical split of assets should for fairness’ sake be divided equally, subject to any credit being given to one party ‘where there are good reasons to do so’.

It’s a practice around which there is much debate and negotiation since there can be many reasons for a ‘departure from equality’. One of those reasons – particularly so in short marriages – can be if one party contributes significant assets or property into the marriage.

The ‘contributions’ argument is best fought with strong supporting evidence. Often a detailed financial chronology, carefully supported with dates, amounts and documentation will be pivotal in proving that contributions are valid and should be taken into account. Similarly, if you consider your spouse may be proposing to use that line of argument against you, it may be equally important to construct a detailed case to blunt those arguments at the Form E stage.

Supporting documents to accompany Form E

filesMost of the Form E disclosures require documentary extracts to support their validity. The list of 16 main headings is included in the Form E.

The area that gets focus in virtually all cases is the legal requirement to provide 12 months’ statements for all bank accounts; and likewise, credit card statements are usually requested subsequently.

Typically we would take the lead in preparing the definitive file of documentation, since this is integral to Form E and the documents need to be completely consistent with the Form’s entries.   Because each document will be scrutinised by the other side it is important that they are professionally reviewed in advance to ensure completeness and to avoid the chance of inadvertently undermining any proposed lines of argument.

As with the Form E, we can “project manage” the Form’s enclosures, listing exactly what is required, explaining how / where to get missing documents and tracking the outstanding items until completion.

Helping answer detailed financial queries from the other party

In order to elicit additional financial information about the other party’s assets and income each party’s solicitor has a short window of opportunity after the exchange of Forms E to ask questions of the other.

With our detailed knowledge of your finances we will be well-placed to draft careful answers to such questions.