Hidden or Forgotten? Dealing with Overseas Assets in Divorce

Overseas assets - whether a holiday home in Spain, an investment portfolio in Switzerland, or shares in a family business abroad - can significantly complicate divorce proceedings. These assets are often the most difficult to value, the easiest to overlook, and in some cases, the most tempting to hide.

This article explains how overseas assets are treated under UK divorce law, the disclosure obligations that apply, and what happens when a spouse fails to declare foreign holdings.

Understanding Overseas Assets

Overseas assets encompass a wide range of properties and financial instruments located outside the UK. These can include:

• Real estate: Properties such as holiday homes, rental properties, or land.
• Financial accounts: Bank accounts, investment portfolios, and savings held in foreign institutions.
• Business interests: Shares in foreign companies or partnerships.
• Collectables: Items of value like art, antiques, or luxury goods.

Recognising the types of assets involved is crucial, as it sets the stage for how they will be treated during divorce proceedings.

The Importance of Disclosure

During a divorce, both parties are legally obligated to disclose all assets, including those held overseas. This requirement is crucial for ensuring a fair financial settlement. Failure to disclose overseas assets can lead to severe consequences, including:

• Legal penalties: Courts may impose fines or even prison time for contempt of court.
• Increased costs: If undisclosed assets are later discovered, the offending party may be required to cover the legal fees of the other party.
• Unfavourable settlements: Non-disclosure can result in a less favourable financial outcome for the party attempting to hide assets.

Transparency about all financial holdings avoids complications later in the process and protects against adverse costs orders if concealment comes to light.

Types of Assets: Matrimonial vs. Non-Matrimonial

Understanding the distinction between matrimonial and non-matrimonial assets is vital in divorce proceedings:

Matrimonial Assets

These are assets acquired during the marriage, regardless of whose name they are in. Examples include:

• The family home
• Joint bank accounts
• Investments made during the marriage

Matrimonial assets are typically subject to equal division between the parties, reflecting the principle of fairness in UK divorce law.

Non-Matrimonial Assets

Non-matrimonial assets are those acquired before the marriage or received as gifts or inheritances. These may include:

• Properties owned prior to the marriage
• Inherited wealth
• Assets acquired after separation

While non-matrimonial assets are generally not shared, they may be considered if the matrimonial assets are insufficient to meet the reasonable needs of both parties.

Valuing Overseas Assets

The valuation of overseas assets can be complex, often requiring the expertise of professionals familiar with the local market. Here are some key considerations:

• Real estate: For properties, obtaining a valuation from a qualified local expert is essential. This ensures that both parties agree on the asset's worth, preventing disputes.
• Financial accounts: Bank statements and investment portfolios can typically be valued using recent statements.
• Business interests: If a business is involved, hiring an accountant to assess its value may be necessary.

Accurate valuations are crucial for achieving a fair settlement and ensuring that all assets are accounted for.

Legal Framework for Division of Assets

In the UK, the division of assets during divorce is guided by the principle of fairness. This means that all assets, including those held overseas, are considered in the financial settlement. The court will take into account various factors, including:

• The length of the marriage
• The financial needs of both parties
• The contributions made by each spouse, both financially and non-financially

While the starting point for asset division is often equality, the court has the discretion to adjust this based on individual circumstances.

Navigating Foreign Laws

When dealing with overseas assets, it is essential to consider the laws of the country where the assets are located. Different jurisdictions may have varying rules regarding asset division, which can complicate matters. Here are some key points to keep in mind:

• Jurisdictional issues: The UK courts may not have jurisdiction over foreign assets, making it necessary to liaise with legal professionals in the relevant country.
• Enforcement of orders: If a financial settlement is reached, enforcing the court's orders in a foreign jurisdiction can be challenging. It is crucial to understand the local laws and procedures to ensure compliance.

Engaging with legal experts who specialise in international family law can help navigate these complexities.

The Role of Prenuptial Agreements

Prenuptial agreements can play a significant role in determining how overseas assets are divided in the event of a divorce. These agreements outline how assets will be treated and can simplify the process. However, courts may overturn prenuptial agreements if they are deemed unfair or if one party was coerced into signing.

Factors that may lead to a prenuptial agreement being deemed invalid include:

• Discrimination against children
• An overly one-sided agreement
• Lack of independent legal advice

It is essential to ensure that any prenuptial agreement is fair and legally sound to withstand scrutiny in court.

Addressing Hidden Assets

If you suspect that your spouse is hiding overseas assets, it is crucial to take action. Here are some steps to consider:

• Formal requests: Start by requesting information from your spouse's legal representative regarding any undisclosed assets.
• Court orders: If necessary, seek a court order to compel disclosure of assets.
• Forensic accountants: Engaging a forensic accountant can help uncover inconsistencies in financial disclosures and identify hidden assets.

The court takes non-disclosure seriously, and penalties can be severe for those attempting to conceal assets.

Enforcement of Financial Orders

Once a financial settlement is reached, ensuring compliance with the terms is essential. If your spouse fails to adhere to the court's orders regarding overseas assets, enforcement can be complicated. Here are some considerations:

• Jurisdictional agreements: Many countries have agreements with the UK regarding the enforcement of financial orders, but this is not universal.
• Local legal assistance: Engaging a solicitor in the country where the assets are located can facilitate the enforcement process.

Understanding the legal landscape in both the UK and the foreign jurisdiction is crucial for effective enforcement.

Seeking Professional Guidance

Given the complexities involved in dealing with overseas assets during divorce, seeking professional legal advice is essential. Family law solicitors with experience in international cases can provide invaluable support, including:

• Guidance on asset disclosure
• Assistance with valuations
• Representation in negotiations and court proceedings

Having a knowledgeable legal partner can help ensure that your rights are protected and that you achieve a fair financial settlement.

Conclusion

Overseas assets add layers of complexity to divorce proceedings, but they do not place a fair settlement beyond reach. The key lies in early disclosure, accurate valuation, and, where foreign jurisdictions are involved, coordinating with legal professionals who understand both UK family law and the local rules that govern enforcement.

Remember, the key to a successful outcome lies in being informed and prepared for the challenges ahead.

For further information and trusted legal advice regarding overseas assets in divorce, get in touch with us at Carlsons Solicitors.