I don’t have to tell them THAT do I?
We are often approached by accountants and clients frustrated with the family law disclosure requirements. Clients often say “I don’t want to give them my tax returns, bank statements or payslips - that is a breach of my privacy”.
A good understanding of disclosure obligations is important in order for parties to comply, but also so that disclosure is only made of items which are strictly required to be disclosed.
There are serious ramifications for a person who does not comply with their obligations, including adverse findings being made against them in Court, a Costs Order and/or the overturning of Orders.
The relevant Rules provide that a party to a financial case must make full, frank and timely disclosure of a party’s financial circumstances. This includes:
the party’s earnings, including income that is paid or assigned to another party, person or legal entity;
any vested or contingent interest in property;
any vested or contingent interest in property owned by a legal entity that is fully or partially owned or controlled by a party;
any income earned by a legal entity fully or partially owned or controlled by a party, including income that is paid or assigned to any other party, person or legal entity; the party’s other financial resources;
any trust:
of which the party is the appointor or trustee;
of which the party, the party’s child, spouse or de facto spouse is an eligible beneficiary as to capital or income;
of which a corporation is an eligible beneficiary as to capital or income if the party, or the party’s child, spouse or de facto spouse is a shareholder or director of the corporation;
over which the party has any direct or indirect power or control;
of which the party has the direct or indirect power to remove or appoint a trustee;
of which the party has the power (whether subject to the concurrence of another person or not) to amend the terms;
of which the party has the power to disapprove a proposed amendment
of the terms or the appointment or
removal of a trustee; or
over which a corporation has a power and/or if the party, the party’s child, spouse or de facto spouse is a director or shareholder of the corporation;
any disposal of property (whether by sale, transfer, assignment or gift) made by the party, a legal entity in which a party has an interest in a corporation or a trust in which a party has an interest that may affect, defeat or deplete a claim:
in the 12 months immediately before the separation of the parties; or
since the final separation of the parties; and
liabilities and contingent liabilities.
In summary, disclosure is generally required of: an interest in a trust, even if only as a discretionary beneficiary but in considering disclosure regard also needs to be had to what distributions have been made to the party to date and what financial involvement the party has had in the trust to date; and income earned by any entity where the party is a shareholder or director.
Disclosure requirements can get complicated – if in doubt, please contact one of our experienced family lawyers.