High net worth couples often have assets across the entire world. Offshore accounts are now quite common, and this is one of the most popular ways in which various individuals attempt to conceal income and avoid taxation. In addition, many families own properties around the world. So what does this all mean during a divorce? How are these overseas assets divided, and what kinds of considerations should couples take into account?
The Common Misconception
One of the biggest misconceptions about offshore assets is that they cannot be accessed by spouses during a divorce. In truth, national borders really have no impact on the divorce proceedings, and spouses are still entitled to their fair share of these international assets. Even nations like the British Virgin Islands are now starting to change their beneficial ownership laws, making it even easier for spouses to recover assets that are concealed in these nations. Even if nations have problematic beneficial ownership laws, they can still be overcome with the correct approach.
Privacy Laws
If a spouse fails to disclose certain assets, they risk serious legal consequences. However, for those consequences to materialize, there needs to be actual proof that assets were concealed in the first place. Due to strict privacy laws in a number of different countries, it may be very difficult for spouses to uncover hidden assets. This is especially true if countries do not have a treaty agreement with the United States.
Different Rules
When dividing property that is located overseas, that property is subject to the laws and regulations within that nation. The normal rules that apply to U.S.-based property do not apply. This might lead to significant tax issues for couples, and it may also be very difficult to ascertain the true value of these overseas properties.
Determining the Value of Overseas Properties
In the context of overseas real estate, the courts may use a variety of strategies to determine the true value of various properties. One easy solution is simply to take a property of similar type and value that is located in the United States, and base all calculations on this example.
On the other hand, both parties may testify as to what they believe the overseas property is actually worth. The judge may then examine the various points of both parties and make a decision based on the information they have in front of them. A judge may also state that they are “reserving the distribution” of the foreign property, which means that they do not really have any way to determine its true value. If this is the case, the spouses will have the opportunity to register the divorce documents in the overseas nation and then go through that country’s court system to divide the property.
The Reality
Despite the fact that the United States and various other nations have laws that account for these situations, dividing overseas assets remains a problem for many couples. Many of the potential methods for dividing these assets are so much of a hassle that many individuals do not even bother. However, a truly determined spouse can get access to these assets with the right approach. Of course, a skilled attorney is always a critical asset in these scenarios.
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