International Correspondence Lawyers & Financial Experts

Strategic International Divorce

Date: 04-SEP-2006
Presented by: Jeremy D. Morley, International Family Law Office

People with assets and international connections who are contemplating a divorce, as well as the spouses of such people, should first secure Strategic International Divorce Planning.
The financial consequences of being divorced in one jurisdiction rather than another might be highly significant.
For example, the difference between getting divorced in London instead of in New York can be staggering. England has recently acquired an extremely well-deserved reputation as the divorce capital of the world for anyone whose spouse is well-endowed with assets. Once the English divorce courts have finished their work, and the English solicitors and barristers have collected their fees, a once-married spouse with assets will now most likely become an ex-spouse with far less assets. Such people often wonder too late why they did not seek international divorce planning advice before it was too late.
Likewise, the disparity between the practices of divorce courts in Tokyo as compared to those in Sydney, and of the divorce courts in Hong Kong as compared to those in Frankfurt, are equally vast – or possibly even more so.
Yet very few people do their homework on these critical issues at a time when it could really make a big difference. They simply assume that wherever they live is necessarily the jurisdiction in which they must sue or be sued. They walk in blind to what may be the most significant financial transaction of their life.
The differences between one divorce jurisdiction and another are far more than the difference between a soccer team playing at home or playing away. It is instead a difference between playing one game at home and a totally different game with totally different rules away.
The analogy to a game is not inappropriate. Any serious competitor plays a competitive game strategically. Is the process of divorce any less serious than that?

Timing is Everything

When clients with international connections consult international family law counsel about their possibly forthcoming divorce, the timing is often critical. When do they expect to separate or divorce? If divorce is looming fast there is much less that can be done than if divorce is only a future possibility.
In fact, it may even be beneficial to patch up even a bad relationship, at least temporarily, until changes have been accomplished that might yield a better result in a different jurisdiction.

The Strategic International Divorce Planning Process

Here is what should be done for a motivated client:

1. Analyze the Family's Entire Economic Picture.

This is exactly what any divorce lawyer does in a conventional divorce situation but the strategic international lawyer will pay particular attention to any connections that the family has with other countries, to assets that are located overseas and to the possibility of moving assets or family to other jurisdictions.

2. Consult with the Client as to His or Her Goals.

Divorce lawyers can easily make a bad situation very much worse. They must be extremely sensitive to a client's real goals. For example, there is no point in advising a client to move his assets into an offshore trust if that will destroy a relationship with his soon-to-be-ex or drive an inappropriate wedge between him and other members of his family. Is the client prepared to move lock, stock and barrel to a new country for a few years? Does he believe that his wife will join him there? How about the children?

3. Provide an Initial Analysis of the Law in Several Different Possibly Appropriate Jurisdictions.

The strategic international lawyer will prepare an initial analysis of the most obvious possible jurisdictions, including jurisdiction of the current residency, the other jurisdictions with which the client or his spouse have substantial connections and any other jurisdictions that the client is interested in, recognizing that if a particular jurisdiction is chosen the client may well need to move there for a substantial period of time and may also be well advised to take others in his family there also.

4. Focus on a few jurisdictions.

The strategic international divorce lawyer will then usually consult with counsel in those jurisdictions that seem to hold the most promise.

International counsel must analyze, separately for each "target jurisdiction":

1. The jurisdictional rules. Will the courts in the target jurisdiction accept the anticipated divorce case, including all financial and child custody issues? What "facts on the ground" will need to be accomplished in order to satisfy the conditions?
2. The grounds for a divorce. What will the client need to prove in the target jurisdiction in order to be entitled to a divorce? What evidence must the client secure in order to do so?
3. The nature of the assets that are included in the target jurisdiction as property that is subject to being apportioned between the parties upon a divorce or that can be considered in making an economic apportionment between the spouses.
4. The method of asset division that is used by courts in the target jurisdiction.
5. The relevance of the conduct of the parties to the division of assets in the target jurisdiction.
6. The philosophy of the courts in the target jurisdiction.
7. Spousal maintenance. What are the rules concerning spousal maintenance (alimony). For what period of time might such payments be required? What is the likely amount of the award? Does the jurisdiction require a "clean break" whereby the spouse must receive a large lump-sum sufficient to generate the income needed to meet lifetime maintenance requirements?
8. Enforceability issues. Whether there are any specific factors which make it particularly easy or difficult to enforce an award in the target jurisdiction.
9. Particular issues. Each case raises specific matters that must be analyzed, depending on such matters as whether there are:
   
   1. Pre-marital assets. Some jurisdictions allow and even encourage the courts to divide even a party's premarital assets (e.g. England). Others do not (e.g. New York).
   2. Trust assets. Jurisdictions vary considerably in their treatment of assets that a spouse has placed in trust. Some jurisdictions will "pierce" the trust (e.g. Colorado). Others will not (e.g. Japan).
   3. Inherited assets. Many jurisdictions do not divide assets that a spouse has received as an inheritance. Others do (Netherlands).
   4. Gifted assets. Many jurisdictions do not divide assets that a spouse has received as a gift.
   5. A pre-nuptial agreement. Some jurisdictions do not recognize prenuptial agreements as binding. (Many British Commonwealth countries). Jurisdictions vary significantly in the bases upon which prenuptial agreements may be invalidated or restricted, in the nature of the burden of proof concerning validity and on other critical factors concerning their applicability.
   6. "Bad conduct" Some jurisdictions punish adultery, criminally and by a financial award to the "innocent spouse" (e.g. Korea). Others allow a divorce for mere incompatibility (e.g. California).

5. Analyze the rules concerning children.

Jurisdictions around the world vary enormously in their treatment of children upon a divorce.
Issues include:

• Sole custody versus joint custody;
• Minimal visitation rights to a noncustodial parent versus liberal visitation rights;
• Male-dominated approaches versus female;
• National biases versus impartiality;
• Religious biases versus impartiality;
• Freedom to relocate versus limited relocation;
• Freedom to take children overseas versus inability to do so.

 

An analysis of these matters must consider not only the rules on paper but the rules in practice. Enforcement issues may be critical.

6. Select the jurisdiction.

Having provided the client with the necessary information concerning each such jurisdiction, the client decides on a strategy.

7. Advise as to the steps now to be taken.

International counsel's advice is frequently required to assist with the implementation of the strategy so as to (a) maximize the likelihood that the jurisdiction in question will indeed be the jurisdiction that actually handles the matter; (b) minimize the likelihood that the other spouse will succeed in bringing the case in a less attractive forum or in moving the case from the better forum to a less attractive forum; and (c) maximize the likelihood that the jurisdiction in question will view the facts of the case in as favorable a light as possible.

Strategic International Divorce Planning makes eminent sense for international clients with serious assets to protect.

This article is presented by Jeremy D. Morley, International Family Law Office, 230 Park Avenue, New York, NY 10169;
www.international-divorce.com.
The firm is extremely experienced in representing clients whose affairs are international concerning family law matters and provides clients with knowledgeable, practical, reliable and effective advice and representation concerning international family law matters in New York and, in collaboration with local counsel, throughout the U.S. and around the world.