20 May Overseas Assets: Are They Included In An Australian Property Settlement?
In our increasingly cosmopolitan world, marriages (including SSM) and de facto relationships between people from different countries is more common than ever before.
When these relationships break down there will often be issues regarding how their assets are dealt with particularly where those assets are in different countries.
The Family Courts of Australia and the Federal Circuit Court of Australia (“Australian Family Courts”) determine how property of a relationship should be divided upon separation by using a number of steps.
This involves:
- Considering whether there should be any alteration of the parties’ interests at all;
- Ascertaining the net asset pool of the parties;
- Assessing the financial and non-financial contributions of both parties;
- Assessing various adjustment factors including the future needs of the parties; and
- Considering the practical effect of the proposed property settlement and whether the settlement is just and equitable for both parties.
It may be a surprise to a lot of people in Australia to know that if you have assets overseas, they will generally be taken into account in any settlement of property between you and your former spouse or de facto partner in the event of the breakdown of your relationship.
This is the case even where you think the asset is well outside the jurisdiction, and perhaps beyond the reach and power, of the Australian Family Courts which exclusively deal with all matrimonial causes in Australia.
After all the Family Law Act 1975 (“the Act”) defines “property” very broadly as “in relation to the parties to a marriage or either of them” as “property to which those parties are, or that party is, as the case may be, entitled”.
So, whether you have land in the United Kingdom or the United States, or Italy or Greece or China, or that proverbial Swiss bank account, that asset is counted as “property” in your “property settlement” even if you consider that your spouse has no entitlement to it or you believe that that foreign jurisdiction will take no notice of what the Courts will do or say about the matter.
The Australian Family Courts expressly have jurisdiction to make orders concerning international assets by virtue of section 31(2) of the Act which states the jurisdiction of the Courts “may be exercised in relation to persons or things outside Australia and the territories”.
The duty of disclosure
In any property settlement proceedings under the Act, you must understand that you have a duty to make full and frank disclosure of your financial affairs, including what assets you own and financial resources (for example a right to an overseas inheritance) you may have.
This extends to assets or financial resources you may have overseas.
This commonly requires that you disclose the nature and value of the asset by including it in your Financial Statement, which all parties are required to file in property settlement proceedings.
If necessary you may also need to produce documentary evidence such as copies of the relevant property records or muniments of title, the equivalent of council valuations and so on.
A failure to disclose overseas assets will probably leave no alternative to the Australian Family Courts but to undo a settlement agreement or final property order, and to open up the proceedings all over again.
On the other hand, a full and frank disclosure of the overseas asset will assist the Australian Family Courts in making a just and equitable order taking into account all of the property of the parties.
Proper disclosure could also allow the Courts to make an order “adjusting” the property interests of the parties as between them without necessarily involving control of or exercising jurisdiction over the foreign asset.
For example, if you openly and candidly disclose that you have an interest in land in Bali or the South of France, provided there is credible evidence of the value of that interest, that value can be taken into account in the settlement or the final property order which otherwise affects how the Australian assets are divided.
Jurisdiction issues
Sometimes, however, the foreign assets are significant compared to the Australian assets, and there can be issues about which jurisdiction should apply: the Australian jurisdiction or the overseas jurisdiction.
When dealing with international family law matters in relation to property proceedings, the two main issues are:
- Which Court has jurisdiction?
- Which Court is the most appropriate forum?
Where the parties are Australian residents, proceedings are usually dealt with in the Australian Courts even if one or both of the parties may not be an Australian citizen.
Jurisdiction and the appropriate forum are usually determined by the “closest connection” test. This test means that the country in which the separated or divorced parties have the closest connection, for example where they usually live or where most of their assets are, will be the judicial system that determines their matter.
As stated above, the Australian Family Courts may make orders in relation to property in an overseas jurisdiction.
However, property settlement orders made by the Australian Family Courts may not be automatically recognised and enforceable in the overseas jurisdiction.
Consequently, problems may be experienced in enforcing the property settlement orders internationally.
For example, the Courts may take into account a number of factors such as:
- whether the foreign court will recognise the Australian Court’s eventual orders;
- the costs incurred;
- the connection of the parties to either jurisdiction;
- the parties’ capacity and preparedness to participate in the proceedings in Australia or overseas.
For this reason, it is usually preferable to deal with assets (including foreign assets) assuming they have been properly disclosed, where their ownership and value is adjusted as between the parties in their overall settlement, without having to actually deal with those assets by way of a Court Order that may well not be binding in the foreign jurisdiction.
If you are currently separated or considering divorce and are concerned about the state of your assets and effectiveness of proceedings undertaken in Australia or overseas. Call our Divorce lawyers on 08 8276 7955 or email us your query at admin@dirosalawyers.com.au.
This blog is published by Di Rosa Lawyers for informational purposes only and is not considered legal advice on any subject matter. By reading and re-publishing the blog, you acknowledge that there is no solicitor-client relationship between you and Di Rosa Lawyers. This blog should not be used as a substitute for legal advice from a legal practitioner who specialises in the area and you are urged to consult us or seek your own independent legal advice on any specific issue or matter.
