If either you or your spouse own any foreign property or assets, whether individually or jointly, it can be a complex process to ensure they are divided fairly. Particularly if the country in question has different laws and regulations relating to property division on divorce. So does foreign owned property or assets count in divorce? Read on for more information.
If either you or your spouse own any foreign property or assets, whether individually or jointly, it can be a complex process to ensure they are divided fairly. Particularly if the country in question has different laws and regulations relating to property division on divorce. So does foreign owned property or assets count in divorce? Read on for more information.
If you have concerns about your family law situation and you feel you need legal advice, contact specialist family solicitor Helen Miller of Stowe Family Law. She is an exceptionally skilled family law expert with over 20 years’ experience, and Managing Partner at this well known specialist family law firm.
How are foreign assets divided in a divorce?
Foreign assets are treated by the court in the same way as assets held within the UK in a divorce settlement. The court will take all assets into account, including those held overseas, in order to split them fairly between the divorcing couple. In some cases, this may involve assistance from foreign authorities or courts to make sure all assets are appropriately valued and accounted for.
The additional layer of information gathering may extend the duration of the proceedings and increase related costs. Some of this arises from the problems surrounding disclosure and accounting for, and valuing, all assets held abroad. It is also important to be aware that the division of foreign assets and property will depend on the circumstances of the case and the laws in the relevant countries where the assets are held. The jurisdiction of the court (country the court is in) can affect the division of foreign assets because different countries have different laws regarding property division on divorce.
What issues will I encounter during divorce when dealing with offshore assets?
Because of the differing legal and tax rules that apply in other countries, dealing with offshore assets in divorce is more challenging than dealing with UK assets. Following Brexit, this can be the case even where an asset is situated in a nearby EU country.
These challenges increase in proportion to the number of overseas assets held, the type of asset, and the degree to which the owning party is willing to cooperate with disclosure early on in proceedings.
Other common problems include:
- Disclosure issues
- Delays
- Increased legal costs
- Valuation issues
- Additional court orders may be required, and enforcement overseas
What happens if my spouse hides overseas assets during the divorce?
Hidden foreign assets are treated in the same way as those concealed in the UK by a spouse during divorce proceedings. The court can order the non-disclosing party to pay a fine, disclose the assets, or even a term in prison for contempt of court. The court also has the power to adjust the financial settlement in favour of the other party to compensate them for the hidden assets.
How are foreign assets valued?
The process for valuing overseas assets for divorce purposes involves getting a valuation from a reputable source, such as an accountant or professional valuer, which is usually appointed jointly by the parties. This increases transparency and reduces the risk of conflict. The assets value will then be converted into GBP using the exchange rate on the date of the valuation.
Will my holiday home be included in the divorce settlement?
If you own or have an interest in an overseas property, it is highly likely it will be added into the matrimonial asset pot for division. Generally, any property considered a matrimonial asset will almost certainly be included for distribution. This includes money made during the marriage and assets used and enjoyed during it, such as holiday homes. On the other hand, the court may decide that property held abroad by one spouse acquired before the marriage, is non-matrimonial property and therefore exempt from the financial settlement. When the asset was purchased and how it was used during the marriage is crucial in helping to determine whether it will be considered a matrimonial or non-matrimonial asset.
Can an overseas pension be shared on divorce?
The UK court does not have the jurisdiction to make pension sharing orders for overseas pensions, unless there is compelling evidence that a pension sharing order would be implemented in the country in which the pension is held.
The only way of dealing with a foreign pension is by offsetting the portion that would have been given to the non-pension owing spouse against other non-pension assets in order to compensate them. This is not without its problems: the pension owning spouse may then end up with a disproportionate amount of assets in pensions but cannot access them until many years later. And the other party may not have any retirement provision, or there may not be enough to offset the value of the pension to generate a similar income during their lifetime.
It is crucial to seek local advice in the jurisdiction where the pension is held and find out what can be done there, and if a UK pension sharing order would be accepted and implemented. It may be possible to obtain a local order which is equivalent to a UK pension sharing order, backed up by undertakings (promises to the court) that both parties will take the required steps in that country to obtain the order.
Other options to consider include:
- A maintenance order to make sure pension monies are paid to the receiving spouse. Although this would have to be bolstered by injunctions for enforcement in case the paying party defaults
- An order to vary a financial settlement relating to the overseas pension.
How are UK orders enforced abroad?
The UK court may face difficulties enforcing any financial settlement order it makes if the country does not recognise or refuses to enforce it. It is sensible to obtain legal advice from a specialist in international family law to secure the best outcome for the division of overseas assets.
That said, the court has the power to issue freezing orders to prevent either party from disposing or dealing with foreign assets until the divorce settlement is reached. This is to make sure the divorcing couple have a fair share of the assets, and to prevent any attempt to transfer or hide them.
Although UK courts can make orders regarding overseas assets, including orders to force disclosure of offshore property, freezing orders to prevent dissipation, and orders to transfer assets to the other party. Problems arise when overseas jurisdictions do not recognise these orders, and enforcement becomes an issue. Since Brexit, orders made by family courts in the UK are no longer automatically recognised in EU jurisdictions; therefore, individuals will need to seek legal advice about jurisdiction and enforceability early in the divorce process.
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