Preserve Your Wealth in Divorce - Understanding and Overcoming the Challenges of Foreign Asset Division

 Posted on May 22, 2020 in Property Division

When it comes to protecting wealth, affluent families typically focus on matters pertaining to tax and estate laws. Unfortunately, there is another major (but often overlooked) threat to any large estate: the divorce.

Almost half of all U.S. marriages end this way, yet only a fraction of the affluent have an existing prenuptial agreement in place. In lieu of one, the estate is valued and then divided equitably among the divorcing parties. 

Unfortunately, the untangling of a marital estate can be a complex and difficult process. Foreign held assets pose even bigger challenges and greater consequences. Learn how to overcome them, and how a seasoned Illinois divorce lawyer can improve the outcome in your case. 

Challenge 1: Titling and Ownership of Foreign Assets

Titling and ownership of assets may be different in another country. As an example, consider the TBE (tenants by the entireties) titling option in the United States, which prevents creditors of only one spouse from attaching the property. 

Certain countries, like the Cayman Islands, do not recognize TBE as an ownership or titling option, which can create some unpleasant surprises in divorce. Such was the case in Florida’s Eubanks v. Eubanks, in which a spouse died before their assets could be retitled. Their ex-spouse received the entire estate. Likewise, a country may label a particular asset community property, even though it would not be labeled that way in the United States. 

Prior to filing for your divorce, ensure you and your lawyer go through each foreign held asset to determine how it is titled, whether it is community property, and if retitling may be necessary, prior to starting any legal proceedings. 

Challenge 2: Structuring of Foreign Assets

Wealth planning structures are often used to reduce tax loads and protect wealth in the event of a death, but when a divorce ensues, these intended safeguards can become a major challenge.

In Radseresht v Radseresht, the UK courts refused to release a husband’s assets to him after his divorce. They did not legally recognize his Dubai divorce because it had been obtained without proper notice and the wife had not been given the opportunity to participate. 

When dealing with trusts, the divorce may divide assets in a way that works in one country, but is contrary to the division laws in another. Alternatively, a country may simply struggle to apply unfamiliar laws. Either way, there is a serious risk for grievous and potentially costly errors when dividing foreign-held assets in a divorce. Reduce the probability with ample planning time and the assistance of a seasoned legal team. 

Contact Our Wheaton Divorce Lawyers 

Davi Law Group, LLC, can help you take proactive steps toward protecting your wealth in a divorce. From foreign assets to businesses to complex marital estates, we manage your case with one goal in mind: getting you the most favorable possible outcome. Contact our knowledgable DuPage County divorce lawyers at 630-580-6373 and schedule your personalized consultation. 

Sources:

https://familylawhub.co.uk/default.aspx?i=ce6090&mod=article_inline

https://www.marketwatch.com/story/divorcing-how-to-preserve-foreign-assets-common-challenges-and-solutions-2020-05-12?mod=article_inline

https://floridaprobate.lexblogplatform.com/wp-content/uploads/sites/206/2016/01/2D14-2872.pdf?mod=article_inline