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Before a financial settlement on divorce can be finalised, both parties must give full and frank disclosure of their financial resources. This includes assets held in this country and overseas. The existence of offshore assets can add an additional layer of complexity to financial negotiations. Furthermore, it is important to remain aware of the potential for sophisticated ownership structures to be used to disguise wealth to reduce the assets available for distribution.
If you and/or your spouse hold assets offshore, this may create particular issues for any financial settlement on divorce or dissolution of a civil partnership. To speak to us about this or any other aspect of family law, simply call us on 0800 652 5577 or complete our online enquiry form to let us know a suitable time to contact you. We are more than happy to respond to any queries you might have.
- About Offshore Assets
- Particular Issues with Offshore Assets and Divorce
- Complex Ownership Structures
- Why Choose JMW?
About Offshore Assets
The expression ‘offshore assets’ can describe a number of different situations, which raise unique issues. An asset may be physically located outside England and Wales, for example, a Spanish holiday property or jewellery in a safe deposit box abroad. In other cases, assets may be held by a financial institution located abroad, such as money in a foreign bank account or an offshore pension plan.
Corporate and personal wealth may also be held using complex trust and/or shell company structures that span multiple jurisdictions, often with the aim of reducing potential tax liability, sometimes legally, sometimes illegally.
Particular Issues with Offshore Assets and Divorce
Just because assets are held offshore does not mean that a person is trying to deceive either their spouse or civil partner, or HMRC. We understand that assets located or owned in other jurisdictions may require a different approach from assets held in the UK and, on occasion, the involvement of other professionals.
Different countries have different taxation regimes. Accordingly, there may be hidden tax liabilities associated with the transfer of property held abroad that will need to be explored before a full picture can be gained by both parties. Tax liabilities here in the UK may also arise if offshore assets are to be repatriated in order to satisfy a financial settlement. At JMW, we have excellent links with taxation and accountancy experts who can assist where taxation is likely to be an issue.
Pension plans in other countries can present specific problems. What might be a perfectly sensible approach to a UK pension could be entirely inappropriate for a pension scheme located abroad. In many cases, the order of a UK court is unenforceable against a foreign pension scheme. Consideration therefore needs to be given to a different approach to the scheme and/or crafting a settlement that is fair to both parties without requiring the division of a pension outside the jurisdiction of the English courts.
Complex Ownership Structures
Revelations from the Panama Papers and other similar leaks have highlighted the lengths some individuals will go to in order to conceal their wealth and sources of income from the tax authorities and potential ex-spouses.
Whether a person has been engaged in a legitimate (but complicated) tax saving exercise or has used the greater degree of secrecy available in certain territories in order to hide assets, the situation will need to be assessed carefully to ensure that the ownership of assets is understood thoroughly and that nothing ‘slips through the net’. Where it is proportionate to do so, we will work closely with a forensic accountant to analyse complex assets and investigate their ownership fully.
Why Choose JMW?
Our solicitors have experience of dealing with substantial assets held in a wide range of jurisdictions from Europe and the Americas to Africa, East Asia and the Middle East, including so-called ‘tax havens’. We have the expertise to help trace the ownership of assets held via trust and corporate vehicles and the ability to take decisive action to safeguard assets that could otherwise be concealed or dissipated.