The complexities of family law proceedings extend beyond national borders, encouraged by the rise of globalisation and the increasingly simple nature of entering into international transactions and investments. In the event of separation, property settlement proceedings are critical for severing your financial relationship. Challenges arise when there are assets, liabilities or financial resources that are outside Australia. The most common concern is whether overseas assets are subject to property settlement proceedings under the Australian family law jurisdiction. Seeking legal advice is vital in ensuring a just and equitable division of domestic and overseas assets.
Legal framework in determining assets subject to property settlement
Upon the breakdown of the relationship, parties typically seek to separate the financial ties that bind them. This is done through the process of a property settlement. Property is defined broadly under the Family Law Act 1975 (Cth) (‘the Act’) and includes overseas assets such as jewellery, real estate, shares, cryptocurrency, inheritances, and pensions.
As a matter of principle, under the Act, parties to any family law dispute are legally required to provide each other with full and frank disclosure of all direct and indirect assets, liabilities and financial resources in proceedings involving financial disputes to determine the property pool. This duty can be found under Rule 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (‘the Rules’). The duty is ongoing, commencing at pre-action stages and requiring the parties to provide updated disclosure until the proceedings are finalised.
Overseas assets, liabilities, or financial resources acquired prior, during, or after separation must be disclosed irrespective of their type and location. Once the property pool is determined, the Court will consider factors such as each party’s financial contributions, future needs, and the care of any dependent children to determine just and equitable division of the assets and avoid disadvantages to the other party.
Duty of disclosure and overseas assets
Providing full and frank disclosure is mandatory to ensure an equitable distribution of assets and transparency between parties with those assets, liabilities and financial resources that make up the property pool.
Consequences for breaching the duty of disclosure can include setting aside an order made by the court or an agreement reached privately between parties if there is evidence of the breach and making findings in favour of the other party. Additionally, the court may order the production of documents by granting leave for subpoenas to be issued. Furthermore, adverse legal orders might be made against parties who conceal assets, such as cost orders or make findings of contempt of court.
It is important that you disclose all relevant information about every asset, liability and financial resource held in your sole name or joint name with the other party or a third party (i.e., a business partner or family member) – even if that item is located overseas. If you and your former partner cannot agree on the value of an overseas asset, you may need to get a formal independent valuation.
Court jurisdiction
The most common issue faced by the court when dealing with overseas assets is the jurisdiction of the court. The Act governs family law matters within Australia and pursuant to section 31(2), “the jurisdiction of the Family Court may be exercised in relation to persons or things outside Australia and the Territories”. However, while Australian courts may be able to deal with overseas assets, it does not mean that Australian court orders made in relation to overseas assets are legally binding or enforceable in international jurisdictions. This means another jurisdiction cannot be compelled to adhere to Australian court orders. The foreign jurisdiction can take the Australian court orders into account, but it is not necessarily bound to recognise or enforce the orders.
Due to the difficulty navigating foreign jurisdiction, if you hold assets overseas and in Australia, it is good practice to obtain legal advice regarding property settlement in Australia and the country where the assets are situated. This will assist in determining the best country to pursue a property settlement and relevant legal advice as the laws surrounding family law property settlements differ greatly between different countries. It might be more beneficial for you to pursue a property settlement in the jurisdiction where the overseas assets are located than in Australia.
It may also be relevant to obtain advice from the foreign jurisdiction regarding tax implications, as these will vary from country to country.
Please note that overseas superannuation and pensions can operate differently in overseas jurisdictions, so dealing with those assets in the foreign jurisdictions might be necessary. In Australia, superannuation can be “split” in a property settlement provided you make an application to the Court. Unlike Australian superannuation interests, an overseas superannuation interest may not be able to be transferred or split. If an order is made overseas to split Australian superannuation interests, it will be ineffectual.
International Treaties and Agreements and the need for Recognition and enforcement of foreign judgment
Australia has entered into various treaties and agreements to facilitate the operation of international law within Australian borders. For example, the Hague Convention on the Recognition of Divorces and Legal Separations (‘Hague Divorce Convention’) facilitates the recognition of divorces and legal separations obtained in foreign jurisdictions. The Hague Divorce Convention enables the implementation of the rights and obligations arising from divorce or separation, including the division of property. Additionally, Australia can seek the assistance of foreign authorities and legal jurisdictions to uncover hidden assets and enforce disclosure.
What if you suspect your ex-partner is hiding assets overseas?
One of the most common concerns for clients going through separation is whether their ex-partner is hiding assets overseas. It is that you seek legal advice when suspecting your former spouse is attempting to hide or transfer assets across countries as there are specific legal strategies to stop this from happening. For example, your legal practitioner might apply to the court for an injunction order stopping the other side from dealing with their asset without your authorisation. This will prevent the other side from attempting to transfer the assets to a foreign country.
Your legal practitioner might apply to the court to have access to the documents that your former spouse is trying to conceal and compel the production of those documents by issuing a subpoena.
If you suspect your former spouse is hiding assets overseas, you might consider hiring a private forensic accountant with experience tracing money overseas. This is usually a very expensive exercise, so you should be confident that your ex-partner is hiding assets overseas before you hire a forensic accountant.
RAMSDEN FAMILY LAW – HOW WE CAN HELP WITH OVERSEAS ASSETS
If you need clarification about overseas assets in a property settlement, consult our experienced family law specialists at Ramsden Family Law. We are here to provide you with the necessary legal support and guidance to protect your best interests during this challenging time. Empathy and understanding are crucial to helping clients through these difficult situations.
Every family law case is unique. We provide customised solutions and legal strategies tailored to your specific circumstances. Ramsden Family Law has a strong track record of successfully handling family law cases, including divorce and property settlement disputes.
The content of this article is intended to provide general guidance to the subject matter and must not be relied on as legal advice. Specific advice should be sought about your circumstances.
Posted in: Divorce
April 26 2024
