Can You Hide Assets During a Property Settlement?

Short answer: no.

When a relationship breaks down, it can be tempting to think that keeping a bank account, investment, business interest or other asset hidden from your former partner might give you an advantage during property settlement negotiations.

It does not.

In family law property proceedings, parties have an obligation to provide full and frank financial disclosure. Attempting to conceal assets or financial information can have serious consequences and may ultimately work against you.

What is financial disclosure?

Financial disclosure is the process by which each party provides information and documents about their financial circumstances.

Under rule 6.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), each party has a duty to the Court and to every other party to provide full and frank disclosure of all information relevant to the proceeding in a timely manner. The duty continues from the commencement of the proceeding until it is finalised.

For financial and property matters, rule 6.06 specifically requires disclosure of a party's financial circumstances. This can include earnings, interests in property, interests in entities, other financial resources and certain interests in trusts.

The obligation is not limited to assets held solely in your own name.

Depending on the circumstances, relevant financial interests can include:

• real property;
• bank accounts and savings;
• shares and investments;
• superannuation;
• businesses and company interests;
• interests in trusts;
• vehicles and other significant assets;
• income and other financial resources; and
• liabilities and debts.

The disclosure obligation may also extend to interests held through companies, trusts or other entities.

What if you simply do not disclose an asset?

Failing to disclose an asset is not the same as the asset being ignored.

If the asset is later discovered, the Court may take the failure to disclose it into account when determining the proceedings.

The consequences will depend on the circumstances, including the nature and significance of the non-disclosure, whether it was deliberate, and when the information was ultimately disclosed.

The Court may also make orders requiring further disclosure or production of documents. In appropriate circumstances, non-compliance with disclosure obligations can have more serious procedural consequences.

The Family Law Rules expressly warn that a failure to comply with the duty of disclosure may result in evidence being excluded or other consequences, including punishment for contempt of court.

What about moving money or transferring assets?

Trying to make an asset difficult to find does not necessarily make it disappear from the property settlement.

For example, transferring money to another person, moving funds between accounts, disposing of property or restructuring interests through a company or trust may not prevent the Court from considering the relevant circumstances.

This is particularly important where a transaction has been undertaken with the intention of putting an asset beyond the reach of the other party.

The Family Law Act 1975 (Cth) contains provisions that can allow the Court to make orders in relation to transactions and property where appropriate. The precise powers available will depend on the circumstances of the matter.

What documents might need to be disclosed?

The documents required will depend on the circumstances of the case.

However, parties may be required to provide documents such as taxation returns and assessments, superannuation information, bank and financial records, and documents relating to businesses, companies, partnerships or trusts.

The Court's Rules also set out particular disclosure requirements for financial and property proceedings. Importantly, the obligation is not simply about handing over a list of assets. A party must provide sufficient information to allow the other party and the Court to understand their financial position.

What if you suspect your former partner is hiding assets?

If you believe your former partner has not provided complete financial disclosure, do not assume that there is nothing you can do.

Depending on the circumstances, your solicitor may be able to request further information and documents, conduct appropriate investigations, or seek orders requiring the production of particular documents.

The Court also has processes available for obtaining relevant information and documents where appropriate. It is important to raise concerns about non-disclosure early rather than waiting until the matter is close to finalisation.

The bottom line

You cannot simply choose which assets to disclose during a property settlement.

The obligation of full and frank disclosure is an important part of the family law process. It is designed to ensure that both parties and the Court have a proper understanding of the financial circumstances relevant to the dispute.

Trying to hide an asset may seem like a clever strategy at the time, but if it is discovered, the consequences can be far more serious than simply having to disclose the asset in the first place.

If you are negotiating a property settlement or are concerned that your former partner has not provided complete financial disclosure, legal advice can help you understand your rights and the steps available to you.