Dealing with foreign assets within a divorce
It may be the case that you or your partner own an interest in an asset, pension, or investment which is situated overseas. This will have relevance if you are going through separation or divorce, as it is essential to understand what powers the English courts have to make orders relating to those assets, and what other options may need to be considered in reaching a financial settlement.
Firstly, it is the case that English courts do have the power to make orders in relation to foreign assets and resources, but the order is made against the person concerned who owns the asset, not the asset itself. If action is therefore contemplated against such assets, the first step is to check with lawyers in the country where the asset is situated about the possibility of enforcement if an English order is made, and the possibility of removing an asset and the tax consequences of this. Early advice should also be obtained from local lawyers to check details of the asset itself. For example, if it is a property, to clarify what local searches are available, how long it may take to obtain a valuation of the asset and the process for this, and whether notices can be registered that may affect dealings with it.
Foreign Pensions
Where the asset in question is a foreign pension, in the first instance it is important to obtain certain information from the Trustees of the pension fund and to take advice from local lawyers to clarify whether an English order will be enforceable. If it proves to be too complex, or expensive, to explore obtaining an interest, it may be possible instead to get an undertaking from the party with the benefit of the pension that they will obtain a local order themselves, or to consider whether it is possible to offset the value of the interest against another asset which is situated in this country.
Offshore Trusts or Companies
If the asset involved is an offshore trust or company, complex issues are involved. Trusts are complex structures, often established for reasons of tax which raise questions about whether the beneficiary has power to control the movement of money within the trust. An order over the shares or assets in the trust will only be possible if this is the case. Recent case law (Prest v Petrodel 2013) has stated that there are only limited situations when this can happen, for example if it can be established that the trust is a resulting trust where shares are held beneficially for the party. Alternatively, it may be established that the court has the ability to “pierce the corporate veil”, in order to make an order in relation to the assets; however, there is a high threshold to be met to do this and therefore limited circumstances when this can be done.
With a foreign company, it is essential to understand the structure of the company and explore whether a transfer of shares is possible and the tax consequences of this. Expert Trust and Corporate advisors both here and abroad are necessary to advise on this.
Early preparation is essential in all cases, whether acting for the potential applicant or respondent, as it is essential at an early stage to understand the structure, the ownership, and the tax implications. You will also need advice on the viability of pursuing the action in light of the costs involved and what the available alternative options are to reach a settlement, such as by offsetting.
How can Parfitt Cresswell help?
In this situation, the first step is to get expert legal advice from an advisor who will help you to obtain the necessary facts and information. Obtaining the right advice on the available options early on is the best way to ensure the best possible outcome. For further information and to take advantage of our FREE Initial Consultation, contact us today.
