Financial Planning for Divorce as an Internationally Mobile Individual

Overview

Divorce is always financially significant, but for internationally mobile high-net-worth individuals, it introduces a layer of complexity that rarely arises for domestic couples. Multiple jurisdictions may claim the right to deal with the divorce. Offshore assets — properties in several countries, investments in offshore funds and holding companies, trusts and foundations — may or may not be within the reach of the courts. Foreign pensions may be impossible to divide. And the financial outcome of an English divorce may be dramatically different from what would be awarded in another country.

This guide does not provide a comprehensive treatment of family law — that requires a specialist family lawyer. It focuses on the financial planning dimensions: understanding the landscape before a divorce arises, structuring affairs to manage the risk, and understanding what to expect financially if a divorce does occur.

This guide is for general information only. Family law and financial remedy law are highly case-specific and complex. Always instruct a specialist family lawyer for advice on divorce proceedings.

Jurisdiction: Which Country's Courts Deal With the Divorce?

Why Jurisdiction Matters

The financial outcome of a divorce can vary enormously depending on which country's family law applies. England and Wales is famous for its "generous" treatment of divorcing spouses — courts have wide discretion to award assets, income, and capital well beyond what would be ordered in many other jurisdictions. A spouse who can obtain a divorce in England and Wales may receive a significantly different financial settlement than if the divorce is dealt with in, say, Germany, the UAE, or Thailand.

This means that in international divorces, there is frequently a race to issue divorce proceedings in the most favourable jurisdiction — a process known as "forum shopping."

Jurisdictional Bases in England and Wales

English and Welsh courts can deal with a divorce if, at the time of the application, either party:

• Is habitually resident in England and Wales
• Was habitually resident in England and Wales and is currently resident there
• Is domiciled in England and Wales

Even a returning non-resident may trigger English jurisdiction if they have resumed habitual residence. Where an international couple separates, both parties should take urgent legal advice on the jurisdictional picture — before the other party files.

Habitual Residence vs Domicile

For divorce jurisdiction, habitual residence is the primary connecting factor in England and Wales and in EU family law. Habitual residence is a factual concept — it is where you actually live, with a sufficient degree of stability. It is not the same as tax residence (though the two are often aligned).

If you are internationally mobile and your habitual residence is genuinely in another country at the time of separation, it may be possible to pursue or defend proceedings in that jurisdiction rather than England and Wales — but only if proceedings are issued there first.

Financial Disclosure in International Divorces

The Obligation to Disclose

In English financial remedy proceedings, both parties are required to provide full and frank disclosure of all their assets — wherever located in the world. This includes:

• UK and overseas properties
• UK and offshore bank accounts and investments
• Pension rights in the UK and abroad
• Interests in companies and partnerships, wherever incorporated
• Interests in trusts (as beneficiary, potential beneficiary, or settlor)
• Digital assets

Non-disclosure is a contempt of court with potentially severe consequences including criminal sanctions. English courts take a very dim view of parties who fail to declare offshore assets.

Enforcement of English Orders Overseas

Getting an English court order is one thing; enforcing it against overseas assets is another. England and Wales have reciprocal enforcement arrangements with a range of countries, but not all. Enforcement against assets in countries with limited cooperation requires local legal proceedings — which can be costly, slow, and uncertain. Parties should consider the enforceability of any order in the relevant countries when negotiating a settlement.

Offshore Assets and Corporate Structures in Divorce

Offshore Companies and Investments

Assets held through offshore companies, partnerships, and investment vehicles are technically held by those entities — not by the individual. However, English courts look through corporate structures in financial remedy proceedings and consider the economic reality of the individual's ownership. An individual who owns (or effectively controls) an offshore holding company will be expected to disclose and account for the underlying assets.

Where an individual has deliberately transferred assets to offshore structures in contemplation of divorce proceedings, the court has powers to set aside or vary dispositions designed to defeat a financial remedy claim (Section 37 of the Matrimonial Causes Act 1973).

Trusts and Divorce

The treatment of trust assets in English financial remedy proceedings has been the subject of extensive case law. Key principles:

• Where the trust is a nuptial settlement — a settlement made by one party for the benefit of the family — the court has specific powers to vary the trust under Section 24(1)(c) of the Matrimonial Causes Act 1973.
• Where the trust is not a nuptial settlement (for example, a family trust established generations before the marriage), the court may still consider the trust assets as a resource available to the beneficiary, even if the court cannot directly vary the trust.
• The key question is the degree of certainty of benefit: where a party can reasonably expect to receive trust assets, those assets will be treated as part of the resource available to be considered in the overall financial picture.

Pre-marital trusts established by parents or grandparents for the benefit of their descendants have generally (though not always) received more protection than trusts established by the spouses themselves during the marriage.

Foundations

Private foundations are treated similarly to trusts by English courts: the court will look at the substance of the founder's or beneficiary's relationship with the foundation, and whether there is a real prospect of benefit, rather than at the formal legal structure.

International Pensions and Divorce

UK Pension Sharing Orders

UK pensions can be subject to pension sharing orders (a portion of the pension is divided and transferred to the other spouse's pension), pension earmarking orders (the other spouse receives a share of the pension payments in payment), or pension offsetting (one party keeps their pension; the other receives equivalent assets of a different type).

The value of UK pensions for financial remedy purposes requires actuarial assessment — particularly for defined benefit (final salary) schemes, where the value is more complex than a simple fund value.

Overseas Pensions

Foreign pension schemes present significant practical difficulties in divorce proceedings:

• A foreign pension scheme is not subject to UK pension sharing orders unless it is willing to comply voluntarily — and most are not
• Disclosure of foreign pension values requires cooperation from the foreign scheme and possibly translation and professional valuation
• Pension offsetting (using other assets to "buy out" the pension entitlement) may be the only practical approach for foreign pensions

The value of overseas pensions must still be disclosed, but the mechanism for division is typically negotiated between the parties rather than achieved through a direct pension sharing order.

Planning to Manage Divorce Risk

Pre-Nuptial Agreements

For internationally mobile HNW individuals entering a marriage or civil partnership, a pre-nuptial agreement is an important planning tool. A properly prepared pre-nup:

• Documents the assets each party brings to the marriage (pre-marital assets)
• Specifies which assets are to be treated as separate property throughout the marriage
• Provides for the financial arrangements in the event of divorce

For an English pre-nup to carry maximum weight, it must be:

• Freely entered into by both parties
• Accompanied by independent legal advice for each party
• Concluded in good time before the wedding (not days before)
• Based on full financial disclosure by both parties
• Not manifestly unfair at the time of intended enforcement

Post-Nuptial Agreements

Where a couple is already married, a post-nuptial agreement achieves the same purpose. Post-nups may be appropriate following a significant change in financial circumstances (such as a business sale or inheritance) or as part of a reconciliation where financial arrangements need to be clarified.

Structural Protection

Some internationally mobile individuals use trust and corporate structures partly to manage the risk of a future divorce — ensuring that family assets (particularly multigenerational family wealth) are clearly separated from personal assets, and that trust beneficiaries' interests are not classified as nuptial property. The effectiveness of this approach requires:

• The structure to be established well before the relationship began (ideally long before)
• Genuine independence of the trustees
• The trust not having been used in a way that amounts to a nuptial settlement

Structures established in contemplation of a relationship breakdown will receive no protection.

Financial Planning During and After Divorce

Immediate Financial Priorities

In the period following separation, internationally mobile individuals should:

• Review all beneficiary nominations on pensions and life policies — ensure an estranged spouse is not still named
• Assess cash flow — divorce can reduce available income significantly, particularly if maintenance orders are in place
• Review insurance arrangements — health, life, and income protection that previously covered both spouses may need restructuring
• Consider interim financial arrangements during proceedings — courts can make maintenance and asset preservation orders

Post-Divorce Planning

After a financial settlement is reached, a comprehensive review of the entire financial plan is needed:

• Update wills and succession documents (as noted in our succession planning guide, divorce in England and Wales invalidates gifts to a former spouse but does not revoke the entire will)
• Review pension beneficiary nominations
• Rebuild investment strategies appropriate to the new financial position
• Consider the tax implications of the settlement — certain transfers in financial remedy settlements may have CGT implications

How Global Investments Can Help

Global Investments advises internationally mobile HNW individuals on the financial planning dimensions of divorce. We work alongside specialist family lawyers (who deal with the legal proceedings) and help clients manage the financial aspects: asset disclosure and valuation, restructuring post-settlement, rebuilding investment and pension strategies, and reviewing succession arrangements.

Our experience across multiple jurisdictions — and our understanding of offshore structures, international assets, and cross-border pensions — means we can help clients navigate the financial complexity of an international divorce with greater clarity. Contact us to arrange a confidential consultation.