Offshore Assets in Divorce

How Are Offshore Assets Treated in Divorce?

In high-net-worth divorce cases, offshore assets - such as foreign properties, trusts, bank accounts, and business interests - can significantly complicate financial settlements. UK courts have the power to consider and divide these assets, but doing so requires careful legal and financial strategy.

Legal Context:
Offshore assets are subject to the same principles as domestic ones, including disclosure, valuation, and division under the sharing, needs, and compensation principles.

What Counts as an Offshore Asset?

Common offshore assets include:

• Holiday homes and second residences
• Foreign bank accounts and investment portfolios
• Overseas business interests
• Trusts and foundations
• Vehicles, art, and luxury goods held abroad

These assets may be held in jurisdictions with different legal and tax rules, making disclosure and enforcement more complex.

Are Offshore Assets Considered Matrimonial Property?

Offshore assets are treated like any other asset:

• If acquired during the marriage and/or used for joint purposes, they are likely matrimonial and subject to division.
• If acquired before marriage or inherited, they may be non-matrimonial and therefore excluded from consideration, but can still be considered if needed to meet financial needs and to ensure fairness.

Example:
A holiday home purchased during the marriage and used by the family is likely to be treated as matrimonial property.

Like other assets, all offshore asseys must be disclosed in Form E, and failure to do so may result in adverse inferences, cost penalties, and even the reopening of financial orders. Read more on non-discloure here.

Challenges in Offshore Asset Division

Dealing with the division of offshore assets is more challenging than domestic assets even in a straightforward divorce, because of the differing legal and tax rules that apply in other jurisdictions. Post Brexit, this can be the case even where an asset is located in a nearby EU country.

These challenges increase in proportion to the number of offshore assets held, the type of offshore asset (for example, whether it is an overseas holiday home or a financial interest in an offshore corporation or trust), and the degree to which the owning party/parties are willing to cooperate with disclosure early in the proceedings. 

Further complexities include:

• Disclosure resistance: Offshore assets that may be hidden or underreported.
• Valuation difficulties: Accurate valuation may require local experts.
• Enforcement hurdles: UK court orders may need to be recognised abroad.
• Increased costs: Both legal and other

Post-Brexit Impact:
Even assets in nearby EU countries may now face additional legal barriers due to changes in cross-border enforcement.

How are offshore assets valued?

Proper and professional valuation is an essential part of divorce proceedings to ensure that assets are divided fairly between the parties. Otherwise, there may be real risks of unfair division, reasons to challenge orders, and reopen proceedings later down the line. 

The recommended route for the valuation of assets, particularly in a high-value divorce, is for the parties to hire an expert accountant jointly. This increases transparency and reduces the risk of conflict. In the case of offshore assets, it will often be necessary to engage valuation experts from the relevant jurisdiction, whether these are local real estate agents for an overseas property, or - for more complex corporations or trusts - expert accountants familiar with the jurisdiction’s legal and tax rules. 

Dealing with non-disclosure issues 

Full and frank disclosure of each of the party’s financial resources is one of the fundamental steps in a divorce process, whether the divorce is taking place through agreement or proceeding through the court.

Unfortunately, at least one party may take steps to conceal the full extent of their assets. This can be particularly common in acrimonious and high-value divorce proceedings where one partner primarily manages the couple’s money, owns a business (particularly an overseas business), or has a significantly higher income. Non-disclosure is a serious issue and may result in a lesser financial settlement for the guilty party and, in more serious cases, in an order for contempt of court which can carry a prison sentence. 

Hiring a professional forensic accounting expert in these cases can be invaluable as they can: 

• Closely examine financial statements and other documents for detailed information/inconsistencies
• Uncover and trace disguised assets at home and overseas
• Prepare accurate estimates and valuations
• Determine which assets fall into the matrimonial property category

Enforcement of orders abroad

UK courts can make orders in relation to offshore assets, including orders to compel disclosure of the details of offshore assets, orders to freeze offshore assets to prevent dissipation, and orders for transfer of assets. 

Problems can arise when overseas jurisdictions do not recognise these UK court orders and there are challenges concerning enforcement. Since Brexit, orders made by the Family Court in England and Wales are no longer automatically recognised in EU jurisdictions; therefore, parties will need to seek advice early about jurisdiction and enforceability in a divorce process. 

Read more on enforcing a court order internationally here.

Need Expert Help?

We are the only HNW family law firm with an in-house Financial Forensics department. Our team specialises in identifying, tracing, valuing, and forensically reviewing assets, including businesses, property, and investments. 

If your divorce involves offshore assets, our elite team of divorce lawyers and forensic experts can help you navigate the complexities. We offer a free initial consultation to qualifying individuals.

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