How to protect marital assets?
NICOLA FURMSTON of Barker Gotelee explains when the court may intervene in the alleged dissipation of assets ahead of divorce
A RECENT case in which a husband had effectively stripped a company of assets and devalued its shares under a wife’s nose before she had a chance to instruct solicitors to stop him, is a reminder of the importance of taking prompt action to preserve the assets of a marriage pending a decision as to who is to have what by way of financial settlement.
There is invariably a certain level of mistrust between divorcing parties and suspicion that the other spouse is dissipating assets to avoid them being put into the marital pot for distribution is an inevitable consequence of this mistrust, but when exactly will a court grant an injunction to stop this sort of behaviour?
It is not enough to simply say that the other party has got more of the assets in his or her name, so that must mean he/she will dissipate them to defeat a claim for a share. The majority of people have no such intention.
To grant an injunction, which involves a considerable level of inconvenience to the other party, the court must be convinced that a person is going to make an imminent disposal of an asset so as to defeat a claim for financial provision.
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How is this proved? Well, an ear to the ground approach is always useful.
Consider past history – has the spouse always had an inclination to fiddle, expenses, the tax-man or whoever?
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If so, this may be sufficient to persuade the court to err on the cautious side and grant an injunction.
Alternatively, direct threats to dissipate assets might have been made, for example “I’d rather have nothing than give you a share”. This is valuable evidence.
There is a second test, however. A court must feel that the assets, other than the one thought to be being disposed of, would be insufficient to provide a satisfactory settlement.
If the assets consist of a mortgage-free house and a bank account with �20,000 in it and a spouse seems to be frittering away the money in the account a court would be unlikely to grant an injunction because a much larger asset remains available for distribution to the innocent spouse.
The morale of the tale, though, is that there may not be too much time to ponder.
Assets can be stripped away in the blink of an eye, and, although they can sometimes be recovered, this is not always the case.
Act quickly if there is concern about what the other party is up to.
A temporary injunction can be granted within 24 hours and reconsidered longer term if the spouse feels it is unfair. There is little point in locking the stable door after the horse has bolted.