According to the United Nations, there are 195 recognised countries in the world. It's unlikely that a couple or family are going to live in, or have assets in all of them, but with planes, trains and automobiles and remote working being an option for many, the world is much smaller than it once seemed.
For the vast majority of individuals separating, divorcing or dissolving their civil partnership in Scotland, they will have lived their life here and only have Scottish assets. For some, however, employment could have taken them further afield, wealth enabled them to purchase a holiday home in the sun or a ski chalet in the mountains and financial advice encouraged them to bank abroad or set up companies in other jurisdictions.
The addition of international matrimonial property adds a layer of complexity when advising clients on a Scottish separation or divorce. The priority is to ensure that all matrimonial property – whether held locally or internationally – is identified, valued and then divided fairly between the parties.
By way of explanation, all assets owned by the couple at the date on which they separated form matrimonial property. This may include heritable property, bank accounts, shares, pension interests and also overseas assets, such as holiday homes. There are some exceptions to that rule, such as assets owned prior to the marriage (other than a property purchased for use as a family home and the furniture within that property), inheritance and gifts from a third party, none of which would be 'in the pot' for division (although often a detailed analysis of what there is and how it came to be may be required).
Assets held abroad
Where there are assets held abroad, such as the aforementioned holiday home, it is likely that advice will be required in that foreign jurisdiction in order to determine the value of that property. Parties will need to have a discussion as to the future of that property – will it be sold or will one spouse/partner buy the other out? Tax advice should also be sought to identify any tax liability due on a potential sale or transfer and there may need to be input from a property lawyer on the timings and process for a change of ownership. The law in that foreign jurisdiction will govern the mechanics of the transfer/sale, rather than that being governed by Scottish law.
Presumption of good faith and goodwill
Most people enter the separation process aware that they will need to honestly, fully and voluntarily disclose the extent of the matrimonial property held by them as at the date of separation. This involves providing bank statements, pension and property valuations, company accounts and any other documentation which evidence or illustrate the value of an asset, or extent of a liability, as at the relevant date (usually the date of the parties' separation).
Concern about lack of disclosure
But what happens if good faith and goodwill are lacking?
Litigation in any divorce or dissolution case is generally regarded as a last resort. If, however, there is a concern that there has not been a full disclosure of financial information, whether in relation to assets in Scotland or abroad, it may be necessary to raise court proceedings. As part of that process, the court can be asked to order the disclosure of information under what is known as a 'Specification of Documents'. Once granted by the court, the Specification is served on the 'havers' (the individuals, institutions, organisations believed to hold relevant information) and they are given a set time frame in which to provide the information or documentation.
If, after going through the relevant procedures, there remains a concern that certain 'havers' have not cooperated, or have failed to disclose all relevant information, a Commission can be convened calling those havers to appear on oath before a Commissioner to confirm the extent of the documentation held by them.
What happens if these hidden assets are overseas?
The Specification process can be complicated where assets are held overseas. The havers may fail to respond or simply refuse to cooperate because the order for disclosure has been made in a different jurisdiction to where they are based. If that is the case, a process involving a 'formal letter of request' may be required.
Honesty is always the best policy!
Starting off the court process on the wrong (or indeed 'back') foot is never sensible. A Sheriff or Judge will take a dim view of a failure to disclose assets or any attempt to conceal assets. The penalties for non-disclosure of information can be severe and include imprisonment. The truth always comes out - the risk of non-disclosure is never worth it!
If it is discovered at a later date that one party has successfully concealed an asset, the court can set aside a previous order if it can be shown that the non-disclosure was materially prejudicial to the other party.
Following a separation, it is always best to seek early advice from a solicitor specialising in family law. This is particularly so where there are internationally held assets and/or a concern about a party failing to disclose assets. Separation Agreements will be in 'full and final' settlement, so it is vital all investigations into establishing the full extent of the matrimonial property are made prior to signing on the dotted line.
If you are separating from a spouse or partner with and are needing advice on international family law matters, please get in touch with one of our divorce lawyers.
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