Divorce and the division of overseas assets
- AuthorLaura Martin-Read
It is not uncommon for a divorcing couple to have some property in another country, whether this is a holiday home in the sun or the alps, a property in your country of birth, or an investment in commercial property or assets abroad.
‘The term property in this context can cover houses, land or financial assets such as bank accounts or shareholdings in a business,’ explains Laura Martin-Read, Senior Associate at Milton Keynes Family Law. ‘You or your spouse may hold this property jointly, or one or other of you may hold it in your sole name. Either way during divorce the full detail of assets abroad must be disclosed.’
Valuation of foreign assets
From a part share in a vineyard to your own Caribbean island, any assets abroad will be considered in a divorce settlement much the same as any other asset. The value will need to be ascertained, and how this is achieved will depend on the nature of the asset.
It is relatively straightforward for a bank or investment account, as a copy of the account statements for the past year will usually be sufficient.
For a house, building or land then it will be necessary to obtain a valuation from a suitably qualified expert in that country. It is wise to try and agree with your spouse one independent valuer that you will both use, as this will save any costly disputes between foreign valuers over the true worth of the asset.
If it is a foreign business, then it might be necessary to instruct an accountant. Again, agreeing who to use in advance with your spouse is usually sensible and cost effective. We can guide you in relation to an appropriate independent expert.
How are foreign assets divided?
If you are getting divorced in England or Wales, once the valuation has been obtained then the foreign asset will be considered under the same legal principals that determine the division of all other assets, with the starting point being equality.
In practice, there are a number of factors which may shift the division from equal shares in favour of one spouse. For example, the length of the marriage, if the asset was acquired prior to the marriage, the housing needs of parents and any children, and the earning potential of each spouse.
We can advise you on your individual circumstances, let you know what your best outcome is likely to be and negotiate for that on your behalf.
What if you suspect your spouse has not disclosed assets abroad?
If your spouse has lived or worked abroad, or you suspect they hold assets abroad (such as for tax planning purposes) which they are not disclosing then we can raise enquiries to ascertain the truth.
This can be done initially via a formal request to your spouse’s solicitor, and if that is unsuccessful then it can be achieved by seeking an order from the court. Depending on the circumstances and the value of the assets involved, it may also be wise to appoint an expert forensic accountant who can analyse your spouse’s disclosed assets for inconsistencies that may lead to uncovering undeclared assets held abroad.
If your spouse willfully attempts to hide assets it can have very significant consequences. A full and frank disclosure of all assets is expected by the court, which looks dimly on any spouse’s failure to do this. The court has a wide range of powers to penalise them, including reducing their financial settlement and they could be held in contempt of court or even face jail. If after your divorce is finalised, it transpires that your spouse had hidden assets, the court can re-open your financial settlement and make a more favourable finding in your favour.
Enforcement of court orders abroad
If you reach an agreement with your spouse over the division of assets, then we will apply on your behalf to have any settlement agreement made into a court order. Particular care is required in the wording of any court order or settlement to comply with each foreign jurisdictions’ requirements regarding enforceability.
If agreement cannot be achieved, then a court will make an order to stipulate how your assets are to be divided.
If your spouse does not willingly comply with the terms of the court order, then enforcement in a foreign country where the abroad assets are held will involve some extra hurdles. What needs to be done will depend on which country the foreign assets are in. Most countries within the EU, commonwealth and America have agreements in place with the UK for recognition of financial court orders. However, some other countries have no such agreement in place.
Depending on the country where your assets are located, we can advise you what steps should be taken to obtain or enforce any court order and, if necessary, liaise with a solicitor in the country abroad to seek enforcement.
For further information, please contact Laura Martin-Read in the family law team on 01908 787900 or email Laura.Martin-Read@familylawgroup.co.uk.