If you are separating amicably, you may wonder whether full financial disclosure is really necessary.
Perhaps you trust each other. You both know roughly what you own. You may even have already discussed how to divide the house, savings or pensions.
So, do you still need financial disclosure in an amicable divorce?
In most cases, the answer is yes.
Not because mediation assumes that either of you is hiding money. Financial disclosure helps you both understand the same financial picture before you make important decisions.
It also helps you look beyond the assets themselves and consider what each of you will need in the future.
In this article, I look at:
- what full financial disclosure usually involves;
- why it still matters when you are on good terms;
- how future housing, income and pension needs fit into the picture;
- why a 50/50 split is not always the whole answer;
- what happens if information is missing; and
- how mediation can help you stay amicable while still making informed decisions.
Being friendly does not mean being informal about important financial choices.
In fact, good financial disclosure can help you protect the goodwill and trust you already have.
Financial disclosure is not about mistrust
The words “full financial disclosure” can sound intimidating.
They may suggest suspicion, investigations or even a court battle.
However, financial disclosure in mediation has a much simpler purpose.
It helps you build a clear picture of your finances.
In practical terms, this may mean providing documents such as:
- recent payslips or evidence of other income;
- bank statements;
- savings and ISA statements;
- mortgage statements or a current redemption figure;
- information about the value of your home or other property;
- pension statements and current pension valuations;
- investment statements;
- details of loans, credit cards and other debts;
- information about any business interests; and
- details of other significant assets or financial commitments.
The exact information needed will depend on your circumstances.
For example, if you own several properties, have significant investments or run a business, you may need to provide more information.
If your finances are relatively straightforward, the disclosure may be simpler.
The aim is not to collect paperwork for the sake of it.
It is to make sure that you both have enough reliable information to understand the financial picture.
Once you have that information, you can start making decisions based on facts rather than assumptions.
But we already know what we have
You may already know a great deal about your finances.
Perhaps you have shared bank accounts for years. You know roughly what your home is worth. You may also know how much you have in savings.
However, separation often requires a closer look.
For example:
Do you both know the current value of your pensions?
What is the exact mortgage balance?
Are there investments or savings held in individual names?
What debts do you each have?
What income will each of you have after separation?
And, importantly, what will each of you need to live on?
Knowing roughly what you own is not quite the same as having enough information to make decisions about your financial future.
We’ve already agreed what we want to do
Sometimes couples come to mediation and say:
“We have more or less sorted everything out. We just need somebody to write it down.”
That can be a very positive starting point.
Even so, it is important that both of you understand the financial picture before treating those discussions as final proposals.
Why?
Because the information may change how you look at the agreement.
A pension may be worth much more than expected.
The mortgage balance may be different from the figure you had in mind.
You may have forgotten about an investment or debt.
One of you may also have much greater borrowing capacity than the other.
None of this means that somebody has been dishonest.
Long relationships often create complicated financial arrangements.
It makes sense to check the information before making decisions that may affect both of you for many years.
Amicable does not mean informal
This is an important distinction.
An amicable separation is about how you treat each other.
It does not mean making important financial decisions without proper information.
You can remain respectful.
You can trust each other.
You can want to avoid conflict.
At the same time, you can ask questions and request documents.
Those things can sit comfortably together.
In fact, clear financial disclosure can help protect an amicable relationship. It reduces the chance of misunderstandings later.
What about our future needs?
Financial disclosure is not simply an exercise in working out what you have.
It also helps you consider what each of you will need after separation. I have a separate article on what is needed in your wider separation: Family Mediation – It’s Not Just About Children – It’s About Your Whole Separation
This is a crucial part of the financial picture.
For example, you may need to think about:
- suitable housing;
- mortgage or rental costs;
- everyday living expenses;
- the needs of any children;
- your respective incomes;
- borrowing capacity;
- pension and retirement needs; and
- other financial responsibilities.
Two people may receive similar amounts of capital but still end up in very different financial positions.
One person may earn substantially more.
Another may have much greater mortgage capacity.
One of you may have taken time away from work to care for children.
One person may have built up a significant pension while the other has very little retirement provision.
Age can also make a difference.
Someone approaching retirement may have less time to rebuild savings or increase their income.
So, before discussing how to divide the assets, it helps to ask another question:
“What will each of us realistically need to move forward?”
Can’t we just divide everything 50/50?
You may think an equal division makes everything straightforward.
But first you still need to know what there is to divide.
More importantly, equal numbers do not always produce the same practical outcome.
For example, £100,000 in cash is not necessarily the same as £100,000 represented by a pension.
A house also serves a very different purpose from an investment.
Then there are your individual circumstances.
One person may need to house children.
Another may be able to borrow considerably more.
One may have a much higher income.
An equal division of assets does not automatically mean that both people will be able to meet their reasonable future needs.
That is why looking at the whole financial picture matters.
What if one of us knows much more about the finances?
This is common in long relationships.
One person may have traditionally managed the mortgage, savings, pensions or investments.
As a result, the other may feel less confident about the financial information.
Financial disclosure helps ensure that both of you have access to the same information before making decisions.
You can then ask questions and seek further advice where needed.
If this is a concern for you, I look at it in more detail in my article:
My Husband Has Always Dealt With the Money – How Do I Start Untangling Our Finances?
Does mediation require financial disclosure?
If you use mediation to deal with financial matters, disclosure forms an important part of the process.
Financial mediation is not simply a negotiation where each person says what they think they own and then starts making offers.
First, you build the financial picture.
Next, you clarify anything that is missing or unclear.
You can then look at your respective needs and consider possible ways forward.
Only after that does it make sense to start exploring substantive proposals.
As your mediator, I remain neutral.
I do not tell either of you what you should accept.
Instead, I help you identify the information you need. I also help you explore the practical effect of different options.
You can take independent legal advice alongside mediation too.
What if something is missing?
Missing information does not automatically mean somebody is hiding money.
Documents can be overlooked.
A pension valuation may be out of date.
Someone may not know how to obtain a particular statement.
For example, you may discover that a pension valuation is several years old. A mortgage balance may need updating. A bank statement may be missing.
That does not automatically mean anything is wrong.
It simply means you need the current information before moving on.
Sometimes the information itself leads to further questions.
That is also part of the process.
The important point is that both of you have enough reliable information before you start making significant financial decisions.
However, if one person deliberately refuses to provide important information, that creates a different problem.
Meaningful financial mediation may not be possible without adequate disclosure.
Doesn’t asking for disclosure make things more adversarial?
It should not.
The way you approach disclosure makes a big difference.
There is a world of difference between saying:
“Prove that you aren’t hiding anything.”
and:
“Let’s make sure we both understand the finances before we make decisions.”
The second approach is much more constructive.
In my experience as a family mediator, clear financial information can actually reduce conflict.
Instead of arguing about assumptions, you can look at the actual figures.
That can be especially helpful when you have managed to preserve goodwill and want to keep it that way.
What happens once we have completed financial disclosure?
Disclosure is only the starting point.
Once you both understand the finances, you can begin looking at what happens next.
For example:
Can either of you afford to keep the family home?
What housing does each person need?
What might two separate households cost?
How should pensions be considered?
What happens to savings and investments?
How much income will each person have?
What might your position look like in retirement?
You may explore several different possibilities.
That is perfectly normal.
Mediation gives you the space to test those options before deciding whether any of them work for both of you.
Do we still need legal advice if everything is amicable?
Mediation and legal advice have different roles.
As mediator, I remain neutral.
I can provide legal and other relevant information, but I cannot advise either of you personally about what you should accept.
An independent solicitor can advise you about your own legal position.
Some people take legal advice throughout mediation. Others do so at particular stages.
Either approach can work.
Taking legal advice does not mean your divorce has stopped being amicable.
In fact, good advice can give you greater confidence when making important decisions.
If you eventually reach financial proposals through mediation, you will normally also need to consider making those arrangements legally binding through the appropriate court process.
Being friendly is something worth protecting
If you have managed to separate without hostility, that is valuable.
Full financial disclosure does not have to undermine that.
Quite the opposite.
It can give both of you confidence that you made your decisions with the same information.
It can also reduce the risk of somebody looking back later and thinking:
“Did I really understand what I agreed to?”
or:
“Was there something I didn’t know?”
An amicable divorce does not mean relying on blind trust.
It means being open, properly informed and able to make decisions with a clear understanding of what you have, what you each need and what the options could mean for your future.
Frequently asked questions
Do we need financial disclosure if we already agree?
It is still important to understand the financial picture before making final decisions.
An informal agreement may look very different once you consider property, pensions, income, debts and each person’s future needs.
Does asking for documents mean I don’t trust my ex?
No.
Financial disclosure is a normal part of dealing properly with finances on separation.
Both people provide information.
The aim is to make informed decisions, not to accuse either person of dishonesty.
What if I don’t understand the financial documents?
Ask questions.
You do not need to understand every pension, investment or financial product before starting mediation.
Where necessary, you can also obtain independent legal, financial or specialist advice.
Can we remain amicable and still take legal advice?
Yes.
Mediation and independent legal advice can work alongside each other.
Taking advice can help you understand the implications of a proposal without turning the separation into a battle.
You can be amicable and properly informed
You do not have to choose between keeping things friendly and protecting your financial position.
A constructive financial mediation process helps you understand what you have, what you each need and what different options might mean in practice.
You can then make decisions based on information rather than assumptions.
At Divorce Nicely, I help separating couples work through financial disclosure, identify any gaps in the information and explore realistic options for property, pensions, income and other financial arrangements.
All mediation meetings take place online.
If you would like to use mediation to sort out your finances, the first step is to arrange an individual confidential MIAM.
This gives you the opportunity to understand how financial mediation works, discuss your circumstances privately and decide whether mediation may be suitable for you.
The information in this article is for general guidance only and is not to be considered legal advice. Every family situation is different, and you should not rely on this information as a substitute for taking personalised advice about your own circumstances. Reading this article does not create a client relationship. If you would like advice about your own situation, you should seek independent legal advice or contact Divorce Nicely to discuss whether mediation or divorce consultancy may be suitable for you.