Financial Statement — Family Law (UK)

A Financial Statement — Family Law in the United Kingdom records what the parties agree about their relationship, finances, children, or property and the basis on which those arrangements stand, and is shaped by the Matrimonial Causes Act 1973.

The duty of full and frank financial disclosure in divorce and separation proceedings in England and Wales is a fundamental and continuing obligation, established in the House of Lords' decision in Livesey (formerly Jenkins) v Jenkins [1985] AC 424 and consistently affirmed by subsequent courts. Disclosure must be complete, honest, and up to date — covering all assets, income, and financial resources that exist or that the party might reasonably be expected to acquire. The Family Court under section 25 of the Matrimonial Causes Act 1973 must consider 'all the circumstances of the case' including each party's financial resources, needs, and obligations in assessing a fair division of assets; incomplete disclosure makes this assessment impossible.

Failure to comply with the disclosure obligation can have severe consequences. In Sharland v Sharland [2015] UKSC 60, the Supreme Court confirmed that a consent order made on the basis of materially incomplete financial disclosure can be set aside even after it has been approved by the court. In cases of deliberate non-disclosure, courts may draw adverse inferences against the non-disclosing party, impose costs sanctions, and refer serious cases to the Attorney General for criminal prosecution for contempt of court.

The Financial Statement for family law purposes is distinct from a company financial statement (which reports a business's financial performance under the Companies Act 2006 and Financial Reporting Standards), a personal statement of affairs prepared in insolvency proceedings (governed by the Insolvency Act 1986), and a mortgage application financial disclosure. The family law financial statement is a court-related document governed by the Family Procedure Rules 2010 and the accompanying Practice Directions.

For civil partners dissolving a civil partnership under the Civil Partnership Act 2004, identical financial disclosure obligations apply. Section 72 of the Civil Partnership Act 2004 incorporates by reference the financial remedy provisions of the Matrimonial Causes Act 1973, meaning the section 25 factors and the duty of full disclosure apply equally to civil partner dissolution proceedings.

The legal framework governing the Financial Statement — Family Law (UK) in United Kingdom draws on several key statutes and regulatory bodies. Under UK law, the UK GDPR and Data Protection Act 2018 govern personal data in this document. The Consumer Rights Act 2015 protects individuals in consumer transactions. Section 62 of the Consumer Rights Act 2015 addresses unfair terms. The County Court and High Court of Justice have jurisdiction over personal disputes under the Senior Courts Act 1981 and the County Courts Act 1984. The Information Commissioner's Office (ICO) enforces data protection. Parties executing a Financial Statement — Family Law (UK) in United Kingdom should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Matrimonial Causes Act 1973 sets the foundational requirements.

A UK Family Law Financial Statement is needed in any family law context where parties must disclose their financial circumstances to reach a fair settlement of financial matters arising from the breakdown of a marriage or civil partnership.

In financial remedy proceedings in the Family Court following the filing of a divorce petition under the Divorce, Dissolution and Separation Act 2020, both parties must prepare and exchange Form E financial statements at least 35 days before the First Directions Appointment (FDA) under Practice Direction 5A of the Family Procedure Rules 2010. No judge will deal with substantive financial issues at a hearing without both parties having made full financial disclosure; failure to file Form E on time is a contempt of court.

In out-of-court financial settlement negotiations — whether through solicitor-to-solicitor negotiation, mediation, or the collaborative family law process — both parties are expected to make full financial disclosure as a condition of any agreement being enforceable. A financial statement prepared to Form E standard provides the documentary foundation for productive financial discussions and enables each party's advisers to properly evaluate any proposed settlement against the section 25 Matrimonial Causes Act 1973 criteria.

In proceedings before the Family Court for a financial remedies order under Part III of the Matrimonial and Family Proceedings Act 1984 (for overseas divorces) or under Schedule 1 of the Children Act 1989 (for financial provision for children), full financial disclosure is required from both parties. For Schedule 1 applications, the court focuses on the child's needs and the resources available to each parent rather than the section 25 factors, but thorough financial disclosure is equally essential.

In private dispute resolution — including family arbitration under the Institute of Family Law Arbitrators (IFLA) Arbitration Scheme, private mediation, or early neutral evaluation by a retired judge — participants are expected to exchange financial information to Form E standard to give the process a sound evidential basis.

When parties agree financial terms and wish to have their agreement embodied in a consent order approved by the Family Court — as is required for the agreement to be legally binding and enforceable — the court requires both parties to have signed a Statement of Information (Form D81), which is a summary of their financial positions. A full financial statement prepared during the negotiation process provides the information needed to complete the D81.

A UK Family Law Financial Statement (modelled on Form E under Practice Direction 5A of the Family Procedure Rules 2010) must include the following sections to satisfy the Family Court's disclosure requirements and the section 25 Matrimonial Causes Act 1973 criteria.

The income section must disclose all sources of income received during the past 12 months and the party's projected future income: employment income (supported by the last three payslips and the most recent P60); self-employment income (supported by the last three years' tax returns and business accounts); rental income from investment properties; dividend and investment income; pension income currently being received; benefits and tax credits; and any other regular or irregular income. For directors of owner-managed companies, the income section must also address the company's retained profits and the director's ability to extract further income.

The capital assets section must list all assets owned outright or jointly, including: the family home and any other residential or commercial property (with current valuations from estate agents or surveyors); savings accounts, ISAs, and cash holdings (with current balances); stocks, shares, and investment portfolios (with current valuations); business interests and shareholdings (with business valuations where relevant); vehicles; valuable personal property including art, jewellery, and collectibles; and any other assets of significant value. Each asset must be described by type, ownership (sole or joint), and current value.

The pension assets section requires the cash equivalent transfer value (CETV) of all pension benefits, obtained from each pension provider. The CETV reflects the current capital value of the pension and enables the court and the parties' advisers to compare pension assets with other capital assets. For defined benefit pensions (final salary or career average schemes), a CETV may significantly understate the pension's true economic value; independent actuarial advice from a pension on divorce expert (PODE) is often required under the revised PODE guidance introduced by the Family Justice Council in 2023.

The liabilities section must disclose all debts and financial obligations: mortgages (outstanding balances and monthly payments); unsecured loans; credit card balances; hire purchase or conditional sale agreements; tax liabilities; and any other financial obligations that reduce the party's net asset position. The net asset schedule — total assets minus total liabilities — is the starting point for assessing the matrimonial pot available for distribution.

The financial needs and obligations section requires each party to describe their current and future financial needs — including housing costs, living expenses, childcare costs, school fees, and any special needs relating to health or disability — and any financial obligations to third parties. The section 25(2)(b) Matrimonial Causes Act 1973 factor requires the court to consider 'the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future.'

The business interests section applies where either party has an interest in a business — whether as a sole trader, partnership, LLP, or company directorship or shareholding. The section requires disclosure of the nature of the business, the party's interest, the most recent three years' accounts, and a current valuation. Company valuations for family law purposes are complex; instructions to a jointly appointed Single Joint Expert (SJE) forensic accountant are commonly ordered by the court where the value of a business is contested.

The statement of truth block at the end of the financial statement must be signed by the party making disclosure, confirming that the contents are true to the best of their knowledge and belief, and that they have not withheld any documents or information that they are required to disclose. Signing a false statement of truth is a contempt of court and can result in criminal prosecution. The forms-legal.com Financial Statement — Family Law (UK) template covers the mandatory elements under Matrimonial Causes Act 1973.