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Divorce cases can be challenging to navigate, especially when it’s a contentious or high-asset divorce. During your divorce, you must address many critical matters, including property division. To adequately divide your property, each spouse provides financial disclosures detailing their property, assets, and debts.
But what happens when a spouse has an off-shore account? Are the assets divided, and if so, how? Take a closer look at how off-shore accounts are divided during a divorce in New York.
Is It Legal To Have Foreign Bank Accounts?
Having an off-shore account is not illegal. Many individuals choose to open off-shore accounts because of the advantages, including tax benefits. Additionally, certain locations, like the Cayman Islands and Switzerland, have strict rules concerning client confidentiality, making them safe locations to place funds.
Finding Off-Shore Accounts
One of the obstacles regarding foreign accounts in a divorce is actually finding the accounts. Spouses are required to exhibit full transparency in their financial disclosures, but some individuals choose to omit information about off-shore accounts in hopes their spouse won’t find out about them and therefore won’t pursue any of the assets.
If you suspect your spouse is hiding funds in a foreign account, discuss it with your divorce lawyer right away. Your attorney may need to tap into additional resources, like forensic accountants, to get the full picture with respect to your spouse’s finances. While difficult in some cases, it is possible to find these accounts with due diligence.
Dividing Off-Shore Accounts in a Divorce
Off-shore accounts are treated like any other account for divorce purposes. This means that, depending on the circumstances, they may be divided in your case.
It’s important to consider your state’s property division laws. New York is an equitable distribution state. In an equitable distribution state, the court divides property and assets in a manner that is fair, or equitable, for both spouses. Because it depends on the situation, property distribution is not always 50/50.
Only marital property is available for distribution in equitable property states. Separate property, or property owned by spouses before entering the marriage, is not usually distributed in a divorce.
To determine how to properly divide assets in New York, courts must look at several factors, including, but not limited to:
- The length of the marriage
- Each spouse’s finances
- Each spouse’s age and health
- Whether either spouse wasted any assets
Having an off-shore account doesn’t usually impact property division. However, courts will consider whether either spouse intentionally tried to hide assets. Therefore, if a spouse gets caught purposely hiding assets in a foreign account, this can negatively affect their case.
Challenges With Off-Shore Accounts in a Divorce Case
When a divorce involves off-shore accounts, it can make the case a bit more complex.
Oftentimes, these foreign accounts are located in jurisdictions with strong privacy laws, making it tougher to determine the value of the assets and get access. Additionally, locating off-shore accounts can result in delays and additional legal and court costs for both parties.
Dealing with foreign accounts can be particularly burdensome. For this reason, it’s best to have a skilled divorce attorney on your side who can provide personalized guidance throughout your divorce case.
Penalties for Hiding Assets in Foreign Accounts
Intentionally hiding assets in off-shore accounts can have repercussions. A spouse with an unreported foreign account may have to pay penalties and back taxes and might also face civil and criminal penalties.
Seeking Legal Assistance With Your Divorce Case
If you know or suspect your spouse is hiding assets, don’t wait to consult with an experienced divorce lawyer. The seasoned team at Aiello & DiFalco LLP is dedicated to providing our clients throughout Garden City, NY, and the surrounding areas with trusted advice and exceptional service. Contact our firm today to schedule your consultation.