Separation Agreements for Couples with International Assets

In an increasingly globalised world, it's not uncommon for couples to accumulate assets across multiple countries. 

Whether it's an investment property in New Zealand, shares in a U.S. company, or a bank account in Europe, separating these assets after a relationship breakdown can become legally and logistically complicated.

For couples facing international asset separation, understanding how to navigate overseas property and financial holdings is crucial for achieving a fair and enforceable separation agreement. 

This article explores some aspects of complex separation agreements involving international and overseas assets, especially from a Queensland (QLD) perspective, and how to safeguard your rights and interests throughout the process. 

Understanding International Assets in Separation Agreements 

International assets refer to any properties, investments, or financial interests located outside Australia. These may include: 

• Real estate in other countries 

• Foreign superannuation, pension funds or entitlements in similar regimes 

• Shares or business interests held internationally 

• Offshore bank accounts 

• Trusts or inheritances from overseas 

When couples separate, all property, regardless of location, is considered part of the asset pool for division. However, identifying, valuing, and legally distributing these assets can be particularly challenging due to differing legal jurisdictions and financial systems. 

Key Challenges in Overseas Property Separation (QLD Perspective) 

From a legal standpoint in Queensland and Australia generally, several factors make overseas property separation a complex undertaking: 

1. Jurisdictional Issues - Australian courts can make orders relating to foreign assets, but enforcing those orders in other countries depends on whether the foreign jurisdiction recognises Australian family law judgments. If not, you may need to initiate legal proceedings overseas to enforce your entitlements. 

2. Disclosure and Transparency - Each party has a duty to fully disclose all assets, including those overseas. However, when assets are hidden in jurisdictions with strict privacy laws, it may be difficult to identify and value them without forensic investigation. I can also be difficult to discover assets intended to be hidden in other countries.  

3. Valuation Differences - Foreign real estate and investments can fluctuate due to currency changes, market volatility, and different property laws, making valuations inconsistent or disputed. 

4. Tax Implications - Selling or transferring overseas property can trigger local capital gains taxes, stamp duties, or international tax obligations. Legal advice must consider both Australian and foreign tax liabilities. It may therefore be necessary to engage accountants, lawyers and other advisors in the country in which assets are held.  

Creating a Separation Agreement Involving International Assets 

To manage a separation involving foreign holdings, a complex separation agreement should be tailored to account for the nature and location of all relevant assets. The agreement must deal with all assets and liabilities, including those held overseas.  

Those assets and liabilities should all have accurate valuations ascribed to them, including by relevant professionals / experts in each jurisdiction. Determining tax consequences for proposed asset and liability splits will also be essential as that will contribute to the overall fairness of the intended outcome.  

It will also be important to determine which country's law will govern the agreement and where disputes should be resolved. It may be practical for the country chosen to be the country in which most assets are held. This will also work into how the agreement can be enforced in each relevant jurisdiction.

Due to the many complexities that arise in dealing with assets and liabilities across multiple countries, it is advisable to obtain legal and accounting advice from both Australian solicitors and accountants, and similar advisors in any foreign jurisdiction where assets are located. 

If agreement cannot be reached then the matter may end up at court. Australian Family Courts aim to achieve a fair and equitable division of property.

In doing so, they apply a similar process of asset identification, assessment of each party’s contributions, evaluation of future needs and consideration of all circumstances to ensure a just and equitable division of assets.

Even if foreign assets are hard to access, the court may offset their value against local holdings to balance the division. 

The Role of Binding Financial Agreements (BFAs) 

Under Australian law, separating couples can use a Binding Financial Agreement (BFA) to formalise property settlements, including those involving international assets. While BFAs offer flexibility, they must meet strict requirements to be legally enforceable: 

• Each party must receive independent legal advice 

• The agreement must be in writing and signed 

• It must include a statement of legal advice provided to both parties 

A BFA can be particularly useful for high-net-worth couples with complex international holdings, as it allows them to create bespoke terms outside the court system. However, if not properly drafted, a BFA can be set aside by a court. 

Example: Overseas Investment Property in Divorce 

Consider the example of a Queensland couple who jointly purchased a holiday rental in Bali during their marriage. Upon separation, disputes arose regarding: 

• Who would retain the property; 

• How to manage ongoing maintenance costs; and 

• Whether it should be left to one of them or retained as a joint holding, and how to value the property in a fluctuating market. 

In this instance, the couple: 

• Hired local legal counsel in Indonesia to assess property law requirements; 

• Engaged a certified property valuer in Indonesia;  

• Included clauses in their separation agreement to address exchange rate risks and future liabilities as the property was to be retained as a joint holding as tenants in common; and 

• They were able to include a sale mechanism in the BFA whereby either party could require sale of the asset on a given period of notice to the other to cater for potential future events that may require sale of the asset. 

Ultimately, by working with experienced professionals and crafting a detailed separation agreement, they were able to reach a fair settlement. 

Tips for Navigating Complex Separation Agreements with International Assets 

The sooner you start gathering information on overseas holdings, the better as delays can result in asset depreciation or transfer.

Ensure both parties make full disclosure to avoid future disputes or court challenges. It will also allow for prompt resolution of the BFA and give peace of mind that the BFA is binding. 

Work with Australian family lawyers and foreign legal advisers to ensure compliance with all relevant laws. Consider also engaging accountants in both jurisdictions to ensure relevant tax implications are adequately considered so that your solicitors can work those aspects into the BFA. 

If negotiations stall, a qualified mediator experienced in international separations can help bridge gaps and reach a resolution. 

Take the Next Step: Contact Drakos & Company Solicitors 

Given the complexity of international assets separation, relying on DIY agreements or general legal advice can put your financial future at risk. Experienced family law advice ensures: 

• legal nuances and complexities are addressed; 

• Assets are properly disclosed and valued; 

• Your agreement meets enforceability standards in relevant jurisdictions. 

If you're going through a separation and have assets overseas, don't leave your future to chance. Get tailored advice and a strategic plan to protect what matters most.

Visit our family lawyers Brisbane page to learn more or contact Drakos & Company Solicitors today to schedule a confidential consultation.