How Illinois Courts Handle International Assets and Foreign Property in Divorce
Divorcing spouses must provide complete and honest financial disclosures. They should share whether they have international assets, including bank accounts, offshore trusts, overseas real estate, foreign retirement accounts, and cryptocurrency on international exchanges. They should disclose all assets, even those they have reason to believe are not marital. This is so the court can properly classify them. A spouse does not get to decide unilaterally what is marital and what is not.
Classification of Foreign Property: Marital vs. Nonmarital
Illinois follows an equitable distribution system that calls for the fair division of marital property. Classification is the first step, with international assets in a high asset divorce classified like domestic ones are. Marital property generally includes assets the spouses acquired during the marriage, regardless of whose name is on the records. Nonmarital property tends to include assets each spouse had before marriage, perhaps via inheritance or gift, and kept separate.
It is easier than ever for Illinois couples to own foreign assets. For example, Chicago O’Hare and Midway offer travel to about 265 worldwide destinations. If a couple purchased a villa in Italy during the marriage using marital funds, the villa is typically marital property. If one spouse inherited farmland overseas before marriage and kept it separate, it may remain nonmarital.
Problems arise when the spouses commingle their funds, for instance, if the spouses used marital income to renovate inherited foreign property or if one spouse deposited rental income from that property into joint accounts. In a high asset divorce, even small tracing errors can mean substantial financial consequences.
Disclosure and Valuation of Offshore Accounts in Illinois High-Net-Worth Divorces
Spouses must disclose their offshore accounts like they must disclose any other financial account. A spouse who hides assets may face little credibility with the court, court sanctions, property going to the other spouse, and even the reopening of divorce judgments if the other spouse does not find out about the concealment until later.
If your spouse is hiding assets either domestically or internationally, red flags may include sudden transfers, unexplained business expenses, undisclosed foreign travel tied to financial activity, or differences between your spouse’s lifestyle and the income he or she reports.
Digital footprints may prove helpful. For instance, social media can impact high asset divorce cases. Posts could point to travel, luxury purchases, or business ventures abroad that your spouse did not disclose.
Valuing Foreign Real Estate and International Investments
Valuation of domestic assets is tricky enough, and international assets are even less straightforward. Common issues include:
- Changing exchange rates: Even small currency shifts can shift the valuation of the marital estate by millions of dollars.
- Differences in appraisal standards: Other countries’ valuation methods may differ from those in the United States, casting doubt on what a property truly is worth.
- Political or economic instability: An asset that looks good on paper may have increased risk or be harder to sell due to foreign government policy, inflation, sanctions, or market volatility.
- Local tax burdens: You may have to deal with capital gains taxes, transfer taxes, wealth taxes, or inheritance taxes. These obligations reduce the net value of the asset.
- Encumbrances under foreign law: Legal claims such as mortgages, tax liens, co-ownership rights, or government restrictions may attach to your property under foreign law. These encumbrances can limit your asset’s transferability and cut into its true equitable value.
International business interests are even more complex. For closely held companies, you might need forensic accounting to determine a fair value. For corporations, you probably need to consider minority interests, transfer restrictions, and foreign regulatory constraints.
Dividing retirement accounts and pensions also gets complex with foreign employment. International pension plans may not operate under U.S. Employee Retirement Income Security Act rules, and the foreign country might not recognize qualified domestic relations orders (QDROs). Your Illinois attorney may have to work with foreign counsel.
Jurisdiction and Enforcement Issues with International Divorce Assets
An Illinois court cannot directly control foreign governments, but it can exercise control over the parties that appear before it. If a spouse refuses to transfer foreign assets as ordered, the court can use enforcement tools such as contempt findings, monetary judgments, property offsets, and the seizure of domestic assets.
Courts often award other domestic property to offset the value of foreign assets when direct transfer is impractical. For example, if one spouse keeps foreign business interests that escape easy division, the other spouse could receive a larger share of U.S.-based investments or real estate.
Enforcement across borders can involve additional litigation in foreign courts. This is one reason spouses tend to prefer negotiation over long international disputes.
Negotiation vs. Litigation in High Net Worth International Cases
Court battles over international assets can be expensive and take a lot of time, especially with translation, foreign legal consultation, and international valuation experts. Thus, many spouses negotiate to resolve their high asset divorce cases. They may agree to sell foreign property and divide proceeds, offset foreign assets with domestic ones, or structure buyouts over time.
Careful drafting is a must when it comes to international assets in high net worth divorce. Settlement agreements must clearly address exchange rate fluctuations, tax liabilities, transfer logistics, and foreign law compliance.
The difference between a well-structured settlement and a rushed agreement can represent millions of dollars over time. An Illinois divorce attorney for foreign assets should understand equitable distribution principles, international discovery challenges, cross-border valuation complexities, enforcement risks, and tax implications.
What Happens If a Spouse Hides International Assets?
A spouse hiding international assets might do so through offshore accounts, shell corporations, foreign trusts, or transfers to relatives abroad. An Illinois divorce attorney for foreign assets can use subpoenas, depositions, financial affidavits, and court orders to compel disclosure. The attorney may work with forensic accountants and international investigators, too. If your spouse is hiding assets, Illinois courts can impose sanctions.
International assets are not matters to take lightly when you divorce in Illinois. Contact us at Silberman Law Group for your next steps in the Glencoe area.
FAQs About International Assets in High Net Worth Divorce
Are international assets and foreign property subject to division in an Illinois divorce?
These assets could be subject to property division if they qualify as marital property.
Do offshore bank accounts have to be disclosed in an Illinois divorce case?
Offshore bank accounts must be disclosed in divorce. Not doing so can result in serious court sanctions.
How are foreign properties valued and divided in an Illinois high-net-worth divorce?
Usually, professionals in the foreign country appraise the properties, then other professionals convert the valuations to U.S. dollar value, and divide them equitably or offset them with other assets.
