A divorce case in which a Russian billionaire hid money and assets post-divorce to avoid handing them over to his wife, in terms of Court ordered divorce settlement, has hit the news recently.
Farkhad Akhmedov was ordered to pay his wife Tatiana £453 million following a divorce decree in 2017. However she only received £5 million in settlement and took further action against her husband to obtain what she was due, accusing him of concealing his wealth. The court heard he transferred a super yacht and an art collection into the ownership of trusts and also to the parties’ son, in an effort to reduce his available assets.
Whilst the level of wealth in this case is far-fetched for the vast majority of people, hiding assets during and post-divorce can happen. In Scotland, the legislation does not set out a specific duty on a married couple to disclose all their matrimonial assets and liabilities which were in existence at separation. However, during the course of negotiation, if parties go down the route of full disclosure then it is expected that all assets and liabilities will be disclosed.
If a couple then enter into a Separation Agreement, this Agreement will include a clause stating that the couple have made full and frank disclosure of all assets and liabilities. If this is signed and then it appears that assets have been deliberately concealed, this could be a reason for having the Minute of Agreement set aside at a later date.
Occasionally clients do ask if there is a way to move or conceal assets. This would be heavily discouraged by the solicitor, and in fact could force the solicitor to withdraw from acting. Section 18 of the Family Law Scotland Act 1985 (the Act) allows a person to apply through the Court to set aside any transactions which may have had the purpose of defeating any claims they may have had in a divorce. The Court can look back as far as the previous five years and any actions which could be described as pre-emptive prior to the separation could also be set aside.
If, during the course of a case a party has reason to believe that assets are being concealed or that their spouse is not being entirely honest regarding the level or extent of assets, and the parties are involved in ongoing court action, a procedure known as Specification can be used. This allows a party to apply to the Court to recover any documents which may be relevant and reveal any concealment. The party applying has to have good grounds to believe assets or money may have been moved or concealed and the Courts discourage parties from simply fishing for any information without good reason.
Complying with a court order
What of the situation whereby a Court has made an order but the party refuses to comply? A Court could make an order for sale of, for example, a family home and thereafter distribution of proceeds. Given that the proceeds would never be in either party’s control, as the Court would direct the funds are to be held and distributed by the selling agents, then this would not come as a problem.
However, if the party is ordered to pay a capital sum from, for example, savings and refuses to do so, then the other party can instruct professionals known as sheriff officers to take enforcement action by serving a charge i.e. a formal demand for the funds and potentially take further steps including arrestment i.e. seizing of bank accounts or earnings, or an inhibition on the sale of any properties which prevents their sale without the funds being paid.
Therefore in summary, failing to disclose or failing to pay orders made by the Court post-divorce is not recommended and there are ways and means of assets being revealed and claims paid.
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It is always worth seeking specialist advice if you are concerned about the financial aspects of divorce, as there is much that solicitors can do to help you identify what your aims are and how best to apply the legal tools at our disposal in order to achieve them.
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