We have many clients that were not born in the U.S. Often, people get married abroad and later move to the U.S. to work and live. Sometimes the parties merely lived abroad together at one time. Other times, only one spouse is from another country but later moves to the U.S. with their spouse. Maybe a spouse worked abroad in the past and has retirement benefits (abroad). Whatever the case may be, cases like these can be quite challenging to litigate when there is international property involved in a Texas divorce. Many assets will be evaluated in any Texas divorce since Texas is a community property state.
Some of the most common types of assets that a court will review are:
- Property / Real estate;
- Investment accounts;
- Retirement accounts;
- Businesses owned by one or both of the parties;
- Professional practices; and even
- Stock options.
How property is located in a foreign country will be divided depends on where the international property is located and its nature. As a note, real estate is typically governed by the law where the property is located. Personal property (bank accounts, stocks, retirement, artwork, gold, etc.) is governed by the law of the property owner’s residence.
The question that we will answer here is, what happens to assets that are located abroad? Will Texas have the power to compel the division of community assets located in another country? In this blog, we’ll go over how a Texas court will divide the international property.
First Step - Valuing Your International Property
Figuring out the value of an asset to be divided in a divorce is difficult enough. How much value do you put on the antique furniture that you both love? How do you put an amount on all of the renovations completed on your other home in China or India? The good news is that if you used either community or separate property to make improvements to property located abroad, it is likely that at least a portion of that asset is community property (which will be split between you and your spouse).
So, How Do You Value Your Property?
First, it is essential to note that you will likely have to produce documents or other evidence to help prove the value of assets during the discovery phase of your divorce.
Option #1: The Production of Documents and Other Evidence
Many times this is simple. A bank statement can easily show the value of an account, for example. What about that bank account with over $200,000 (In American Dollars) in India that your husband has? Once a Texas court has established that it has personal jurisdiction over the parties, the court can compel the parties. This means that your spouse is likely to be forced to hand over documentation demonstrating each international asset's worth/value during discovery. Does your spouse have a business abroad that is incorporated in the U.S.? The court may compel your spouse to produce business records and consider the income earned from property abroad while your spouse lived in Texas.
Option #2: Have the Asset Appraised
Sometimes it is not easy figuring out what an asset is worth. Of course, the county's appraisal district will put a value on your house. However, they may not include value for the improvements you have made to the property in the last year. For example, sometimes parties also have some sentimental and numerical value, such as artwork. An appraiser can value these types of items. Many times, parties agree to use one neutral and independent appraiser to not come up with different values than their spouse for an asset. You can also hire a business valuation expert to help place a value on your business to be divided fairly. When a property is located in another country, litigation can get lengthy and tricky. The property might be subject to that country’s laws and procedures for conducting a valuation. In France, for example, notaries perform the valuations, unlike in the U.S. Therefore, you may need to hire more than one valuation expert to help value property located in other countries.
Final Step - Division of International Property
The final step in dealing with a divorce with international property is figuring out which portion of it is community property after valuing it. Here are some of your options when considering dividing property abroad:
Option #1: File for Divorce Twice
File for divorce in the country that the property is located in as well as file in Texas. Chances are if the property is located in that country, that country has the power to divide it. Texas will virtually divide the property that it can, and the country abroad will divide the international assets. This option is relatively standard for countries located in the Middle East (such as Lebanon). Some parties seek religious separation from a religious court so that they are not considered to be married in their home-country abroad either.
Option #2: Allow a Texas Court to Compel the Division of the Asset
A Texas family court will obtain jurisdiction/power over a party and property in a few different ways. For a court to make a binding order that the parties must follow, the court must have power over the person and/or property. In rem jurisdiction is when Texas obtains power over property, namely because the piece of property is located in Texas. However, if Texas has received jurisdiction to divorce you, it can also compel you.
Though a Texas court cannot directly demand an international asset’s division, the court can indirectly compel the division by exercising its jurisdiction over the party. A Texas court can make a party (with property abroad) to complete specific acts that will effectuate property transfer/division. For example, a court may compel a party to sign a deed, domestic relations order, etc. to complete the division.
The court will also have the option, if it does not want to get its hands dirty, to simply allocate the Texas division while considering the value of the property abroad. For example, suppose it has been shown to the court that there is $50,000 in community property funds located in India. In that case, it can essentially give a $50,000 credit to the community estate/other spouse on the property spreadsheet. This option is only feasible if the value and nature of the property abroad are proven to the court.
To sum it up, don't think that Texas cannot touch it during your divorce because a property is abroad. If Texas has personal jurisdiction over the parties in the divorce, chances are, the courts also have the power to make orders compelling division of those assets.
Enforcing International Property Division
Even though you may have successfully obtained a Texas court order compelling division of property abroad, it may be an uphill battle to enforce the order. The problem is that many countries abroad will not enforce a U.S. divorce court order, so you'll need to ensure that any additional paperwork to complete the transfer has been completed. If you have a spouse that does not want to cooperate, you will likely face some issues trying to force them to comply if they won't sign off on that paperwork.
What Should You Do?
If you are contemplating or currently going through a divorce in which there is an international property, you should contact an attorney who has experience dealing with international cases. Walters Gilbreath, PLLC, has proudly assisted thousands of clients with international issues with property division.