Hidden assets in divorce: How to trace and the Court’s approach to undisclosed wealth in the UK

One of the cornerstones of financial remedy proceedings in England and Wales is the obligation on both parties to give full, frank and clear financial disclosure. The family court cannot achieve a fair outcome unless it knows the true extent of the parties’ resources. The duty of disclosure is not optional, tactical, or limited to what a party considers “relevant”. It is a continuing obligation to disclose all assets, income, liabilities and financial resources, whether held in the UK or abroad.

The leading authority is Livesey (formerly Jenkins) v Jenkins [1985] AC 424, where the House of Lords confirmed that a financial order may be set aside if it was made on the basis of material non‑disclosure, even where that non‑disclosure was innocent. What matters is whether the court was deprived of information that could have affected the outcome. Recent case law shows the courts are taking an increasingly robust approach, with serious consequences for those who attempt to conceal wealth.

Despite this, allegations of hidden or understated assets are common, particularly where one spouse controls the finances, owns a business, or has complex or overseas wealth. But that does not mean the issue should be ignored. This article provides guidance on the types of assets most likely to be hidden, how to spot them, and what to do where there is, or has been, evidence of non‑disclosure.

What counts as hidden assets in a divorce?

The courts are alert to attempts to disguise wealth through structure or complexity. With the growing prevalence of AI‑driven tools, there is also an increased risk of financial records being manipulated or falsified with levels of sophistication not previously encountered.

Hidden assets often include:

• Business profits retained within companies

It is common for wealth to be concealed within corporate structures, and attempting to shelter wealth in a company or trust does not automatically protect it. While the court will not automatically treat company assets as matrimonial property, it will look at reality rather than form.

Modern case law continues to follow the Supreme Court’s guidance that the court will consider control and benefit, not just legal ownership, particularly where corporate structures are used to disguise personal wealth. The decision in Prest v Petrodel Resources Ltd [2013] UKSC 34 remains central. Where a company is effectively under the control of one spouse and used as a vehicle to hold personal wealth, the court may treat the value that spouse can access or extract as a financial resource available to them.  Piercing the corporate veil remains exceptional, but the family court will not be defeated by artificial structures.

• Director’s loan accounts treated as personal ‘piggy banks’
• Deferred bonuses, carried interest or future liquidity events
• Trust interests described as “discretionary”
• Cryptocurrency holdings

Crypto assets are increasingly appearing in divorce proceedings. While media coverage often focuses on the perceived difficulty of tracing cryptocurrency, the reality is more nuanced. In many cases, digital assets are traceable, provided lawyers and advisers understand how those assets are typically held.

Practical steps include:

• ensuring disclosure requests explicitly refer to cryptocurrency and digital assets;
• reviewing bank statements for transactions involving known crypto exchanges;
• requesting exchange records where activity is suspected;
• considering forensic blockchain specialists where necessary; and
• obtaining tax advice when structuring settlements involving digital assets.

Ultimately, cryptocurrency should be approached in the same way as any other asset class. While the technology may be unfamiliar, the underlying legal principles of disclosure, valuation and fair distribution remain the same.

• Overseas property or accounts
• Pensions understated or omitted entirely
• Lifestyle Evidence and Hidden Income

Direct proof is not always required — particularly in cash‑based businesses self‑employment cases. The court is entitled to look at how a party lives.

In Al‑Khatib v Masry [2002] EWHC 108 (Fam), the court drew robust adverse inferences where disclosure was misleading and incomplete, illustrating the court’s ability to “fill gaps” caused by non‑disclosure. In L v L [2014] EWHC 3616 (Fam), the court inferred undisclosed income where the figures relied upon were inconsistent with expenditure, travel, property ownership and overall lifestyle.

Also Read: How to value a business in divorce proceedings?

What happens where there is non‑disclosure in a divorce?

Before turning to the cases, it is worth restating the legal position:

• Disclosure is a duty owed to the court, not just the other party
• It applies throughout proceedings (and can continue after orders are made)
• Failure to comply can result in:
  • orders being set aside;
  • adverse inferences;
  • costs penalties; and
  • in extreme cases, imprisonment for contempt of court.

The case of Kingdon v Kingdon [2010] is a key authority on how courts deal with suspected or proven non‑disclosure. It confirms that the court is entitled to draw adverse inferences and, if necessary, “fill the gaps” to achieve a fair outcome — but crucially the decision must be evidence‑based, not speculative.

In Sharland v Sharland [2015], the Supreme Court confirmed that where one party deliberately misleads the court, the innocent party does not have to prove that the outcome would have been different — only that it might reasonably have been. This remains the leading authority and is routinely relied upon.

In Moher v Moher [2019], the Court of Appeal emphasised that the court does not operate as a “cheat’s charter”. Where disclosure is incomplete or implausible, the court is entitled to reject explanations and draw appropriate inferences, without being required in every case to identify a precise figure or bracket for the hidden resources.

So, where disclosure is incomplete, evasive or implausible, the court is entitled to draw adverse inferences. Inferences are conclusions drawn against a party whose disclosure fails to comply with the spirit of the Family Justice system, and they can be a powerful tool. However, careful and meticulous analysis of the available evidence is required. The party inviting the court to draw inferences must equip it with a proper evidential platform, whether by reference to valuations, unexplained bank transactions, or credible recollection of financial arrangements during the marriage. Without that foundation, the court risks speculation, and the utility of adverse inferences may be lost.

The court retains a wide discretion not only as to whether inferences should be drawn, but also as to the weight to be attached to them when dividing the remaining assets. In many cases, there may be other liquid assets available to offset the suspected value of hidden wealth. Where the true value of undisclosed assets cannot be reliably established, parties must be prepared for a broad and often conservative approach as the court does the best it can on limited information.

What happens in cases of serious or systematic non-disclosure in divorce?

The court can go further. Goddard‑Watts v Goddard‑Watts [2023] is a landmark case involving repeated and dishonest non‑disclosure. The parties divorced in 2010 and reached a financial settlement, but it later emerged the husband had failed to disclose valuable trust interests. Not one but two subsequent orders were set aside. When the matter reached the Court of Appeal, the central question was whether the court should:

• confine itself to adjusting the award to reflect the hidden assets (the so‑called “Kingdon approach”), or
• reopen the entire case from scratch.

The Court of Appeal held that the husband’s conduct was so serious and pervasive that the court had to reconsider the entire financial landscape anew. A limited approach was inappropriate because the dishonesty could not be isolated. The case confirms that there is no one‑size‑fits‑all solution — but where non‑disclosure is systematic or fraudulent, the court will not allow a party to benefit from their own wrongdoing.

Likewise, in Cummings v Fawn [2023], the High Court set aside the entire financial order where a substantial inheritance had not been disclosed, and the non‑disclosure amounted to fraud. Where dishonesty is established, the court is far more willing to reopen settlements and treat the original outcome as fundamentally unsafe.

What legal tools are available to enforce financial disclosure?

Third‑party disclosure orders may be appropriate to obtain information from pension providers, banks or other institutions — but only where the order contains sufficient detail to enable proper compliance. Vague or poorly framed orders are unlikely to be effective.

Penal notices and contempt applications can also be used to enforce disclosure obligations. However, practitioners must consider whether committal would be counter‑productive — particularly if imprisonment would destroy an income stream that might otherwise be available to meet claims.

Also Read: Financial Settlement in Divorce or Dissolution: Definitions, Processes, Tips, and FAQs 

A note of caution: Self‑help is not allowed

Suspicion of hidden assets does not justify unlawful conduct. In Tchenguiz & Ors v Imerman [2010], the Court of Appeal made it clear that parties are not entitled to take or copy confidential financial documents without authority — even if those documents might reveal concealment. Disclosure must be pursued through the court’s procedures, not self‑help.

If you are going through separation and are concerned about non‑disclosure — or suspect that your former partner may have misled you in reaching an earlier settlement — prompt specialist advice is essential. Non‑disclosure is one of the most serious failures in financial remedy proceedings. Ultimately, the court will do what is necessary to achieve fairness — even if that means starting again from scratch.