20 Oct How are assets held overseas treated in a divorce here in Australia?
Today’s technology and the ease of transportation have made our world much smaller. Australians are travelling overseas in record numbers, with the number of residents returning from short-term trips in 2023–24 32% higher than the year before. We also love the expat life, with around one million Aussies living and working overseas at any one time.
This naturally leads to many Australians holding international bank accounts or owning property overseas.
But what does this mean in times of divorce or separation? Would these overseas assets be considered part of the shared property pool? And can an Australian court order be enforced overseas?
In this article, we will navigate how any assets held overseas are treated in a divorce. We will also share tips should you find yourself needing to distribute overseas assets in divorce.
How are any assets held overseas treated in a divorce?
What are considered overseas assets?
First, let’s consider which assets need to be included in the Australian disclosure process. This typically includes property (whether it’s your place of residence or an investment), motor vehicles, financial resources such as savings, cryptocurrencies, superannuation, shares and personal items of worth, such as jewellery. Liabilities will also need to be disclosed.
Do I have to disclose my overseas assets in divorce?
Yes. Just like any other assets held in Australia, overseas assets need to be disclosed during settlement. This is a legal obligation for both parties. The ‘duty of disclosure’ compels all parties to provide the other party with documents and information that is relevant to the case. This is regardless of whether the other spouse knows about it or not.
The Federal Circuit and Family Court of Australia also have specific requirements relating to full and frank disclosure of financial matters. Parties must disclose sources of earnings, interest, income, property (vested or contingent interests) and other financial resources. This applies even if they are owned by or paid to someone else, a beneficiary, or are held in a corporation, trust or company, etc.
Parties also have to disclose if any property was sold, transferred, gifted or otherwise in the year before separation or since the final separation.
The rules around overseas superannuation
While your assets or liabilities held overseas will generally form part of your property pool, this is not always the case for overseas superannuation equivalents. In fact, unlike other property, superannuation equivalents held overseas will likely be treated differently from superannuation held in Australia. While your Aussie super can be split or transferred, this might not be the case for retirement accounts held internationally.
Because of that, your overseas retirement accounts are not typically included in the shared asset pool, however, may be a financial resource available. So, if you hold any super equivalents overseas, you should obtain legal advice. You may need to pursue the matter in the country where you hold the retirement accounts.
How is overseas property valued?
To be able to distribute assets equitably, their financial values need to be calculated. If you and your ex can agree on the value of the property, great. But if you can’t, then you will need to begin the family law valuation process. This is where a third-party valuer will determine a reasonable value for your property, including any overseas property.
Will I need to conduct legal proceedings internationally to distribute my overseas assets?
This will depend on many factors, including the assets you have overseas and where you and your ex-partner currently live. Remember that every country has different regulations around the distribution of assets in divorce. It’s wise to seek legal advice in any country where you hold assets, as well as Australia.
Are Australian court orders enforceable overseas?
Australian courts can make orders about overseas assets in divorce, but they can be challenging to enforce. Whether or not they are enforceable, will depend on the country, or part of the country, where you hold the assets.
Once again, you should seek legal advice in both the country where you hold the assets and Australia.
Tips to protect your overseas assets in divorce
Keep records
One of the best pieces of advice I could give to any couple is to keep good records even if you’re purchasing property during the blissful newlywed phase. You’d be surprised how many times my clients regret not paying better attention to the finances during their marriage.
Take notes of purchases, accounts and interests – even if your spouse is usually the one to look after the finances. This goes for activity both inside and outside Australia.
Be honest
Sometimes, when a relationship has soured, one or both parties may try to prevent the other from getting their share. They may be tempted to ‘forget’ about certain assets, particularly if their ex-spouse doesn’t know about them.
The courts will not respond favourably to any party who fails to disclose assets, whether held in Australia or overseas.
Search for missing assets
In addition to the disclosure process, you can conduct other searches for hidden assets. If you feel your ex-partner may be hiding overseas assets in a divorce, seek assistance from an international lawyer and accountant.
Consult an experienced lawyer
Get expert legal advice in every country where you or your ex hold assets. This will ensure you get the best outcomes for your situation.
If you have assets overseas and are considering a divorce, Toomey Family Law is here to help. Our team has the knowledge and experience to help you navigate the big and little issues to achieve the best outcome. Please get in touch today.