Overseas Assets in Divorce: What Happens to Offshore Wealth, Foreign Property and International Business Interests

Does the English Court Have Power Over Assets Held Overseas?

Yes. The court considers both parties’ worldwide resources, wherever they are located. Section 25(2)(a) of the Matrimonial Causes Act 1973 requires the Court to have regard to the income, earning capacity, property and other financial resources each party has or is likely to have in the foreseeable future. That wording imposes no geographical limit.

As well as straightforward assets that a party may hold, such as real property, the wording of the statute includes other financial resources. A financial resource may refer to an asset that is less straightforward, such as a beneficial interest in a trust or an interest in a company. These resources will be taken into account regardless of who holds the legal title.

The court has the power to make a range of orders that can affect overseas assets. These include lump sum orders, property adjustment orders, periodical payments orders, orders for the sale of property and pension sharing/ attachment orders.

English orders operate in personam. This means that the order is binding against a specific person rather than in rem – binding against the specific asset.

The question of whether the English Court has jurisdiction to make an order is therefore rarely the issue. The difficulties usually arise in relation to enforcement of the order abroad. The English Courts will consider potential enforcement issues when making an order and may defray the risk of difficulties by choosing to allocate more of the assets within the jurisdiction to the applicant.

What Do You Have to Disclose About Assets Held Abroad?

Both parties are required to provide full and frank disclosure of their financial resources. The duty to provide disclosure continues from the initial exchange of information up until a final order is made by the Court. Parties are required to complete a Form E which captures all wealth wherever it is held. In Livesey v Jenkins [1985] AC 424, the House of Lords made it clear that the duty to give full and frank disclosure is not just a private obligation between the parties but is a duty to the court so that the court has all of the information that it requires to exercise its duties under section 25 of the Matrimonial Causes Act 1973. As Mostyn J stated in NG v SG (Appeal: Non-Disclosure) [2012] 1 FLR 1211, “The law of financial remedies following divorce has many commandments but the greatest of these is the absolute bounden duty imposed on the parties to give, not merely to each other, but, first and foremost to the court, full, frank and clear disclosure of their present and likely future financial resources”.

The consequences of a failure to abide by the duty of full and frank disclosure may be severe. In Sharland v Sharland [2015] UKSC 60 the parties had reached a consensual agreement but the consent order reflecting the agreement had not been perfected. Evidence came to light that demonstrated that the husband had misled the court at an earlier hearing in relation to a software business. The presentation to the court was on the basis that no IPO was on the horizon and it had been valued on that basis. Between the order being drafted and it being sealed it came to light that the company was being actively prepared for IPO at a figure far in excess of the valuation prepared for the hearing. Mrs Sharland therefore invited the Court not to seal the order. At first instance the judge declined to set aside the consent order because at that point the IPO was no longer in prospect. The Court of Appeal upheld that decision and Mrs Sharland appealed to the Supreme Court. The Supreme Court unanimously held that the Consent Order should not be sealed, and the matter was returned to the High Court for further directions. In Gohil v Gohil [2015] UKSC 61 the Supreme Court restored the High Court’s order setting aside a 2004 consent order for material non-disclosure. In that case the wife had maintained throughout proceedings that the husband’s disclosed financial position did not align with his lavish lifestyle. After the consent order had been sealed it came to light that the husband had been engaged in fraud and money laundering. He was later convicted and imprisoned for these offences.

Does It Matter Where Overseas Wealth Came From?

Possibly. As with all assets, the sharing principle applies only to matrimonial property, and an asset does not become matrimonial simply because it has been moved, retitled or restructured.

When considering how to distribute assets on divorce the court will consider whether property is matrimonial or non-matrimonial. Matrimonial property is property that has been built up during the marriage through the joint endeavours of the marital partnership. Non-matrimonial property is property that was acquired prior to the parties relationship, inherited by one party or received by gift. White v White [2000] UKHL 54 first introduced the concept that matrimonial property should be shared equally between the parties with no discrimination for their respective roles. White also identified inherited and pre-marital property as a possible reason to depart from equality. In Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 the Court developed the law to introduce three strands that the Court will consider on divorce: needs, compensation and sharing. Typically, non-matrimonial property will not form part of the pot of assets that will be shared between the parties, but it may be invaded in order to meet needs.

When non-matrimonial wealth may be shared

In some circumstances property that was originally non-matrimonial can become “matrimonialised” – a concept that was considered by the Supreme Court in Standish v Standish [2024] UKSC 89. The court looks at how the parties have dealt with the asset during the course of the marriage and whether that shows they have been treating it as shared between them. For internationally mobile families an examination of how wealth has been dealt with may be required. Wealth may have been moved upon advice between jurisdictions, for tax, succession planning and asset protection reasons. A transfer made exclusively as a tax saving exercise will not necessarily show that an asset is being treated as shared where it has been simply transferred into the other parties name and remained static. For an asset to become matrimonialised it must be mixed into the common marital pool of assets. Contemporaneous evidence of the provenance of an asset, how it has been treated during the marriage and the rationale behind it being moved will all be relevant considerations that the court will factor into its decision-making process.

What Happens to a Business With Overseas Subsidiaries or an Offshore Holding Company?

Where one party has shares in a company that is based overseas these shares will fall to be taken into account in the same way as any other asset. When dealing with company assets, the court does not have the power to directly make orders for the transfer or sale of any assets owned by a company (whether overseas or based in the UK) as the company is a separate legal entity and is not a party to the financial remedy proceedings. However, there are exceptions to this rule. Firstly, where the company arrangements constitute a nuptial settlement. Secondly, where the court finds that the assets held by the company are held on bare trust for the husband or wife (Prest v Petrodel Resources Lts & Anrs [2013] UKSC 34.)

Nick’s experience

In a recent case it became apparent that the initial headline figure attributed to the cross-border company was little more than an illusion and based upon an investor valuation. The company was offshore, subject to overseas regulations and foreign tax liabilities would be applicable. Our focus in that case moved from pushing for a share of that business to taking more of the on shore secure assets in exchange.

How Are Offshore Trusts Treated in an English Divorce?

Offshore trusts will be a relevant consideration for the court and will fall to be disclosed in the usual way. The court will consider the trust interests as part of the financial resources available. It may be more difficult to obtain information about overseas trusts as, in some cases, the trust will resist providing the information sought. In those circumstances, the court may draw adverse inferences from the failure to provide the information sought.

There are two main ways that an interest in an offshore trust may be factored into financial remedy proceedings.

Route one: the trust as a resource

Under section 25(2)(a) the court can treat trust assets as a financial resource. The test for whether an interest in a discretionary trust will be treated as an asset available for distribution with depend on the test in Charman v Charman [2005] EWCA Civ 1606 – – whether the trustee “would be likely to advance the capital immediately or in the foreseeable future.”

In these circumstances, an order would be made against the spouse who holds the beneficial interest on the basis that the trustees are likely to comply with a request by them to advance the capital to them. Thomas v Thomas [1995] 2 FLR 668 is often cited as the leading authority on “judicious encouragement” – where the order made by the court is predicated on the basis that third parties (for example trustees or in the Thomas case the husband’s family) will be persuaded to make the funds available. In Charman v Charman (No 4) [2007] EWCA Civ 503 Sir Mark Potter P, giving the judgment of the court, described the exercise as requiring a “mixture of worldly realism and of respect for the legal effects of trusts, legal duties of trustees and, in the case of offshore trusts, the jurisdictions of offshore courts.”

Route two: variation of a nuptial settlement

Section 24(1)(c) of the Matrimonial Causes Act 1973 allows the court to vary any ante-nuptial or post-nuptial settlement. A trust can be a nuptial settlement if it makes continuing provision for both or either of the parties to the marriage. Offshore trusts and underlying corporate structures can constitute nuptial settlements as confirmed in the recent case of Kroupeeva v Kroupeev [2026] EWFC 85.

An example of how the court may vary a nuptial settlement was seen in BJ v MJ (Financial Remedies: Overseas Trust) [2011] EWHC 2708. To achieve equality, the Court varied an offshore trust by removing the wife as one of the beneficiaries and required the trust to pay £500,000 directly to her and to settle £750,000 into a new settlement to enable her to have a home.

Can a Foreign Pension Be Shared on an English Divorce?

In short, in most cases it cannot. Goyal v Goyal [2016] EWFC 50 determined that pension sharing under section 24B of the Matrimonial Causes Act 1973 is not available for any foreign pension unless there is compelling evidence that a pension sharing order would be implemented by the relevant jurisdiction. The reasoning is that a pension sharing order is an order in rem – i.e. against the pension rather than the person. The court will not make an order against a foreign scheme that is not capable of enforcement.

The alternatives to a pension sharing order are pension attachment, offsetting or obtaining an equivalent local order in the jurisdiction where the pension is situated.

Can the Court Stop Assets Being Moved Offshore?

The court has power to make protective orders where it believes that there is a risk that assets are about to be placed beyond the jurisdiction of the court. There are two main powers. Firstly, section 37 (2)(a) of the Matrimonial Causes Act 1973 gives the court the power to prevent a disposition about to be made with the intention of defeating a claim. Secondly, the court may make a freezing injunction either under the inherent jurisdiction of the court or under section 37 of the Senior Courts Act 1981. Both types of order can extend to assets that are located outside of the jurisdiction of the jurisdiction – including a worldwide freezing order.

Key Takeaways

In cases where there are overseas assets care must be taken to ensure that there is a complete picture of the financial landscape. It is highly possible that separate advisers in other jurisdictions will be required to provide information and advice and this will take time and incur additional costs. If there is any suspicion that the other party may take steps to move assets in an attempt to put them beyond the jurisdiction of the court, then early legal advice is essential.

The Final Word

In our increasingly international society, the computation and valuation of assets exercise is now more complex and requires detailed analysis.  Careful consideration is required at every stage to establish where assets are held and whether orders made in respect of them are likely to be capable of enforcement.