There are many aspects of a divorce that can become complicated, but one of the most consistently complex areas of divorce is asset division. In addition to the difficulties of assessing and valuing shared property, emotions can create additional tension and disagreements over how assets are divided. In the United States, most states follow an equitable-division law, which means marital assets are divided equally. But what about assets you own overseas? How is your foreign property divided? Keep reading to learn more?
The Difficulties with Overseas Assets
So what makes foreign assets so much harder to handle? There are many factors involved, not the least of which are the laws of foreign countries. For starters, your international property is not subject to US property division laws, but to the laws of the country they’re held in. That country’s tax laws can also impact your property holdings, and due to the difficulty of penetrating international privacy laws, your legal team can have a very hard time properly assessing and valuing foreign assets.
These roadblocks can also lead spouses to use foreign accounts and properties as a way of hiding marital assets during a divorce. If you have foreign assets and are considering a divorce, it’s a good idea to get as much information as you can about these assets ahead of time to ensure that you have records regarding these accounts, should your spouse decide to try to hide them later.
Common Types of Foreign Assets
Couples and individuals have a variety of reasons for holding assets overseas. Some motivations are straightforward and simple: Perhaps you purchased a vacation condo in Mexico that you would travel to each year. Maybe you lived in a foreign country and simply continued to hold some assets in that country when moving back to the US. Other motivations can be less ethical, such as tax sheltering and hiding funds—from your spouse and from the US government.
Whatever the motivation, our team is highly qualified to handle these complex assets. Here are a few of the most common types of overseas assets that we’re experienced with handling:
If you’re aware of any of these kinds of properties, again, it’s a good idea to get as much information about these holdings as you can prior to filing for divorce. If you’re unable to do so, simply provide us with any information you do know, and our team of forensic accountants will work to get the records necessary to properly value the property held.
How Will the Assets Be Divided?
The division of your foreign-held assets will vary depending on the type of asset you have. Foreign bank accounts are a bit easier to handle, as the court is considered to have jurisdiction over those financial accounts based on their jurisdiction over you and your spouse, the owners of the accounts. However, physical properties like second homes and investment properties can be more complicated. A US court does not have jurisdiction to divide a property in another country; however, to circumvent this problem, most courts will find an indirect way to still equitably divide the total marital assets.
For example, let’s say that you and your spouse have a vacation home in Mexico valued at $500,000. While the court cannot require the division of that property directly, they can award one spouse an additional $500,000 in domestically-held assets while awarding the vacation home to the other spouse. In this way, the total marital assets can still be divided equitably, despite the court’s lack of jurisdiction over the foreign property.
Obviously, this means that the most important factor in equitably dividing foreign assets is an accurate valuation of those properties. If there are difficulties getting an official valuation of a property, we may value a similar property domestically, then adjust the value based on location. If you or your spouse disputes the assessment, further valuation and adjustments and can be made.
If you’re facing a divorce and you or your spouse has overseas assets, it’s important that those assets still be included in the discovery phase of the divorce to ensure that you receive your equitable share of marital assets. If you suspect for any reason that your spouse may attempt to hide these overseas assets, please contact one of our experienced divorce attorneys for assistance. We can guide you through the necessary steps to ensure that your property is all valued and accounted for.