Today, the concept of marriage is no longer reserved for the person next door. On the contrary, thanks to decades of technological innovations, and global connectivity, cross-border marriages are becoming more and more common each year. Similarly, thanks to the widespread use of online home purchasing apps, owning property abroad has likely never been more accessible.
However, when these relationships come to an end, the considerations that come with foreign property in divorce can add additional complexity to already highly intricate financial settlement and legal proceedings.
At Lowry Legal, our expert team is adept when it comes to the various international considerations that arise from foreign property in divorce. In this article, we look at some of the most common complications that arise with foreign assets in a separation, as well as what the process of dealing with foreign property in divorces looks like.
Common Complications With Foreign Assets Like Property
Divorce and the dissolution of civil partnerships are highly complex and extremely emotionally charged processes that involve the division of assets. When foreign property is part of the equation, these complexities can multiply. For individuals with international ties, it’s important to understand the implications regarding foreign property in divorce — the jurisdiction issues, valuation challenges, cultural differences, etc.
A selection of the complications you can expect with foreign property in divorce include:
Issues of Jurisdiction
Divorce laws can vary significantly from one jurisdiction to another, meaning any marriage with links in multiple countries will need to be careful to consider the jurisdictions relating to your property and how this could affect the process.
Courts will typically have total jurisdiction over any and all properties within their geographical borders. In international divorce cases, however, factors such as international treaties and agreements can also have an impact — for better or worse. The process will become even more difficult if the spouses involved have ties to more than one country and jurisdiction.
Common Complications With Foreign Assets Like Property
Divorce and the dissolution of civil partnerships are highly complex and extremely emotionally charged processes that involve the division of assets. When foreign property is part of the equation, these complexities can multiply. For individuals with international ties, it’s important to understand the implications regarding foreign property in divorce — the jurisdiction issues, valuation challenges, cultural differences, etc.
A selection of the complications you can expect with foreign property in divorce include:
Issues of Jurisdiction
Divorce laws can vary significantly from one jurisdiction to another, meaning any marriage with links in multiple countries will need to be careful to consider the jurisdictions relating to your property and how this could affect the process.
Courts will typically have total jurisdiction over any and all properties within their geographical borders. In international divorce cases, however, factors such as international treaties and agreements can also have an impact — for better or worse. The process will become even more difficult if the spouses involved have ties to more than one country and jurisdiction.
Global Impact Of Pre-Nuptial Agreements
Pre-nuptial agreements are utilised to outline the terms of the distribution of assets in the event that a separation were to happen. These arrangements can play a crucial role in the context of foreign property and divorces.
However, the enforceability of a prenuptial agreement will vary from jurisdiction to jurisdiction. It is therefore essential that you understand just how each nation involved in a marriage recognises such agreements, as some countries’ laws could render them void and useless. This is something a specialist international divorce solicitor can help with.
Challenges with Valuation
Valuing foreign property in divorce is another significant challenge for couples (and their representation) to work out. There are a number of complications that can arise, including:
- Differing and variable exchange rates
- Fluctuating real estate markets globally
- Diverse valuation methods to choose from
Disagreements over the accurate valuation of high value assets such as foreign property in divorce can quickly lead to litigation. Therefore, it is imperative that you hire experts who are familiar with the specific jurisdiction laws and market conditions for your situation. This is vital to ensure as fair and accurate an assessment as possible of the true value of overseas property.
Enforcement on a Global Scale
Even if a divorce decree is issued in one country, securing recognition and enforcement when it comes to assets held overseas can be challenging, as factors like international treaties between nations will come into play.
If no such agreements are in place, the parties may be required to navigate the complex legal procedures of their nations to ensure that the divorce decree will be recognised and can be executed across the different jurisdictions.
Tax Implications of Foreign Property & Divorce
With divorce will often come complex tax implications. Foreign property holdings will introduce intricate tax issues to the mix. Without proper research, you could leave yourself open to issues such as double taxation on your assets — in both the jurisdiction the property is in, and where you’re based.
To avoid this, it is imperative that you speak to a specialist with knowledge in international tax matters.
Cultural and Language Barriers
Dealing with assets held abroad will, naturally, also mean navigating cultural and language differences. These discrepancies can, depending on the nations involved, be particularly hard to manoeuvre.
Issues to this end include the fact that legal documents, property records, and negotiations may involve some language barriers. This can quickly lead to misunderstandings and possible disputes.
Arrangements Involving Children
If children are involved in a divorce with foreign property, child arrangements can be affected. Things to consider with regards to these issues during a separation include:
- Which country has jurisdiction over child arrangements
- Addressing possible travel restrictions
- Ensuring child arrangement orders across borders can be enforced
Protecting Assets Across Borders
In a high net-worth international divorce, spouses may make some attempts to hide assets. In order to prevent this, parties can seek freezing orders/injunctions from the courts.
These tools can play a huge part in securing foreign property in the divorce process. This ensures that the division of high value assets like property is both fair and equitable.
Divorce & Foreign Assets: What Actually Happens?
The introduction of foreign property in divorce proceedings can introduce extra layers of complexity to an already highly-strung and difficult process. How these assets are dealt with will depend on the laws of the jurisdictions involved, including if there are pre/post-nuptial agreements in place.
The initial process of dealing with offshore assets during a separation follows a similar theme to those without. However, the process will need to take a number of notable diversions in order for all assets to be dealt with properly. A general outline of dealing with foreign property in divorce is as follows:
- Consultation Phase: Whether dealing with assets/property held overseas or within the country of residence, the process should always begin with consultation with legal professionals.
- Determine Jurisdiction: For international divorces, it’s key that you determine where is best to file for the divorce. This will have an impact on laws, rules, timeframe, etc. of the case itself.
- International Assistance: If the case is particularly complex, it may be recommended that you consult a legal professional with extensive knowledge and expertise in international family law to ensure the process is catered to all of the necessary jurisdictions. It might also be useful for your UK family lawyer to work in conjunction with a lawyer from the jurisdiction in question.
- File the Petition: This marks the moment the divorce process officially begins.
- Asset Disclosure: Both parties are required to provide as complete and up to date a disclosure of assets as possible. This includes foreign property in the divorce.
- Asset Valuation: The valuation of foreign assets will likely require the assistance of an expert in the necessary jurisdiction. If both sides are unable to come to an agreement on values, valuers can be instructed to assist the process.
- Settlement Discussions: The purpose of these talks is to try to come to a mutual agreement on key issues in order to reach a settlement that suits all parties.
- Court Proceedings: If an agreement can’t be reached, the divorce may proceed to court. Both sides will present their case, and a decision will ultimately be made however the court sees fit.
Consider Tax Implications: It is vital that you consider the potential tax implications that can arise during a separation, particularly when it comes to foreign property in divorce.
Lowry Legal: Assisting With The Most Complex of Separations
Virtually all separations come with their own unique brand of complexity and difficulty — as is natural when dealing with something as highly-strung and emotional as the ending of a serious relationship. However, as highlighted in this blog, when foreign assets and property are added into the mix, the number of complications and red tape will only increase.
If you’re currently wondering what you can expect to happen to your or your partner’s foreign property in divorce or assets that are situated overseas, you need to seek out support you can rely on.
At Lowry Legal we pride ourselves in delivering a best-in-class service to assist couples through even the most intricate of separations. As highly regarded members of the Legal 500, we have the expertise necessary to help with everything, from assistance with nuptial agreements, to finances after separation, child arrangements, and more.
We are specialists at easing any concerns you might have, while securing your best interests, and remaining as sensitive as we can to what is sure to be a highly emotional period. Offering a totally holistic service, we work with a host of specialist third-parties — including tax professionals — to ensure that we have every base covered in the pursuit of delivering an unbeatable service for you.
For more information about what our dedicated team can do for you, get in touch today.
