Article written by Lili Vasileff for Financial Planning Association
Given the mobility enjoyed by individuals today, divorce across borders is becoming increasingly prevalent. It is also one of the most complicated areas of family law. If you live or move overseas, the challenges you face are many and varied. If things get to the breaking point in your marriage, contemplating how a divorce works in terms of legalities and finances can simply seem like another impossible hurdle to overcome. How does a foreign family law system work?
“Divorce shopping” is a relatively new term to many and rarely will apply if you live in the US. However, the opposite applies if you reside abroad. Divorce shopping relates to when a divorcing couple researches where they might get the best deal before starting proceedings. This means that many countries “lack” harmony in their divorce laws. Some legal systems are not as accommodating and anomalies show distinct bias to one party or another.
“For example, barely half of the European Union member states (EU) honor prenuptial agreements. There is no maintenance for women in Denmark and Sweden. England provides for easier divorce than almost all other European countries. And some countries, such as France, will apply the laws of the other member states – in addition to their own if needed.”1 Malta does not even recognize divorce, only an annulment. In Latin American countries and developing countries, you find fewer support systems for divorce: mutual consent is often required. In Mexico, the laws of divorce and family relations are embedded in civil codes and each of the 31 states and Mexico City has its own laws stipulating the requirements and procedures for obtaining a divorce. Each Mexican state specifies grounds for a judicial or administrative filing for divorce (just recently expanded for domestic violence, incompatibility, separation). Columbia has become famous for quickie divorces due to climate of extreme violence. Chile did not even allow for divorce until 2004 where if you had a failing marriage, you had to resort to subterfuge to gain annulment. Jurisdiction is the critical element governing conflict of laws.
In the US, each state has its own divorce laws. To file for divorce in any state, you must meet the residency requirement. For individuals living overseas, however, where to file is much more complicated and requires professional legal counsel. The jurisdiction can make a huge difference to the rulings that will determine the future of you and your whole family. The worst case scenario is that you and your spouse fight it out in many jurisdictions at the same time, leading to prolonged uncertainty and steep legal bills.
In early October 2011, the European Union approved new rules for cross border divorces in an effort to streamline mixed nationality divorces, reduce legal fees, and discourage “divorce shopping.” Fourteen countries agreed to the rules. Thus, if you are living in Europe or another country, it makes sense to analyze rules for filing for divorce.
These rules apply to:
Couples not living in their country of origin.
Couples living in two different countries.
Couples not sharing the same nationality.
What are the new rules?
If the couple agrees, they can elect which country’s legislation to apply, as long as they have close connection to the country in question.
If the couple does not agree, the legislation of the country where they normally live (or last in which they lived together) will be applied.
If this is not possible, the law of their country of origin, and if this is not shared, the law of the country where the divorce is filed, will be applied.
“In the USA, courts in many states (for example New York) specifically accept international divorces. Courts in most others accept them on a case-by-case basis under the principle of comity.”2 In law, comity specifically refers to legal reciprocity — the principle that one jurisdiction will extend certain courtesies to other nations (or other jurisdictions within the same nation), particularly by recognizing the validity and effect of their executive, legislative, and judicial acts.3
“The Social Security Administration and the Veterans Administration are departments that specifically accept and recognize international divorces. The State Department authorizes and requires US consulates abroad to legalize foreign divorce decrees by granting ‘full faith and credit’ to the signatures of foreign courts. However, in some countries (such as very religious countries) divorce decrees may not be recognized”4 – and, expatriates have no access to the local courts. Determine if the courts in your target jurisdiction will accept the anticipated divorce case, including all financial and child custody issues. What will you need to accomplish in order to satisfy the conditions? What will you need to prove in order to be entitled to a divorce?
US relations with many countries are governed by a number of treaties, both multilateral and bilateral. The Secretary of State declares specific foreign countries to be reciprocating countries for the purpose of enforcement of family support obligations. The US and reciprocating countries establish procedures that are in substantial conformity with statutory standards and cover enforcement of child support orders, paternity testing, cost-free legal services, etc. For example, if you owe more than $2,500 in child support, you are not eligible for a US Passport.
If a child is wrongfully removed from, or retained in the US, recovery of the child is processed legally under the Hague Abduction Convention. Under the Convention, neither citizenship nor immigration is considered when assisting families. The US finds international parental child abduction to be a Federal crime. It is important to recognize that in the US state law recognizes that married parents share equal (or joint) custody of their children. Unless there is a court order or written, enforceable agreement elevating one parent’s rights, you and your ex-spouse share equal rights to make decisions for your children, including where your child resides and how he or she is raised.
Assets and Liabilities
Different countries have very different financial outcomes from divorce. If you and your spouse have assets in different countries, you may have to rely on your spouse’s honest disclosures or upon international treaties that allow for cross border investigations, searches, enforcement, and reciprocity.
The first step is to determine jurisdiction. Major areas of disparity in treatment of support and division of assets exist between countries and even between different states in the US. If your spouse and his/her family moves money internationally, your best offense is to know where your spouse’s assets may be located and how they are titled. You must analyze the targeted jurisdiction strategically.
You must know the following:
1. The nature of the assets that are included in the target jurisdiction.
2. Are your family’s assets held in joint names with others?
3. Are there beneficial interests?
4. Are there trusts involved?
– Are there other assets: Gifts, inheritances, separate, premarital assets?
– The method of asset division that is used by courts in the target jurisdiction.
– The relevance of the conduct of the parties (fault, abuse, violence) in the target jurisdiction.
– The philosophy of the courts in the target jurisdiction.
– The Support Factors and Awards
5. For what period of time might such payments be required?
6. 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?
7. Enforceability issues.
– Are there any specific factors which make it particularly easy or difficult to enforce an award in the target jurisdiction?
8. Other Important Factors
– Is the process easy?
– Is it the most convenient place?
– What venue recognizes your pre-nuptial agreements or other orders?
– What venue favors you and your children — custody?
There are many complex legal and financial issues to consider concerning divorce across borders. For example: where individuals live and work, an understanding of regulations on divorce, cross border divorce proceedings, recognition of court orders among reciprocating countries, etc. Thus, it is important to seek advice from an expert in international divorces.
1 Prospect Magazine UK: “When Love and Culture Clash”, Janine Di Giovanni, December 15, 2010
2 International Divorce in the Caribbean, By Joe B. Gonzalez, April 27, 2009, http://ezinearticles.com/?International-Divorce-in-the-Caribbean&id=2274625 and http://www.vipdivorce.com/faq.php provided by 2006 – 2009 Expat Wealth, a division of Noticias Globales S.A
3 Wikipedia, http://en.wikipedia.org/wiki/Comity
FPA Member Lili A. Vasileff, CFP™, CDFA™, is President of the international Association of Divorce Financial Planners.