Attorney
Dividing assets in a Virginia divorce is already a complex process, and it becomes even more challenging when one or both spouses own property, bank accounts, businesses, or investments overseas. Virginia follows the equitable distribution model, meaning that marital assets are divided fairly—but not necessarily equally—upon divorce. Under Va. Code § 20-107.3, courts classify all property as marital, separate, or hybrid (a mix of both) before deciding how to distribute the marital portion. This classification applies to assets regardless of where they are located, including those held in foreign countries.
While Virginia courts can and do consider overseas property in equitable distribution, they cannot directly transfer title to foreign real estate due to jurisdictional limitations. Instead, they may award a greater share of U.S.-based assets or issue monetary awards to balance out the division. This article explores how courts handle overseas assets in divorce, key legal challenges, and practical strategies for divorcing spouses with international property.
Are Overseas Assets Included in a Virginia Divorce?
Yes. Virginia courts consider all marital property, wherever located, in divorce proceedings. If an asset—whether a house, bank account, investment, or business—was acquired during the marriage using marital funds, it is generally considered marital property and subject to division.
How Courts Classify Foreign Property
Virginia law divides assets into three categories:
- Marital Property – Property acquired during the marriage that is not classified as separate property. This includes income, real estate, retirement accounts, and any other assets purchased with marital funds.
- Separate Property – Property acquired before the marriage or obtained during the marriage by gift or inheritance and kept separate from marital funds.
- Hybrid Property – Property that is part-marital and part-separate, such as a foreign home purchased before marriage but paid off with marital income.
Once the court determines which portion of an overseas asset is marital, it assigns a value to that portion and includes it in the equitable distribution calculation.
Challenges in Dividing Foreign Assets
Although Virginia courts can include overseas assets in a divorce settlement, several unique challenges arise when dealing with international property:
1. Valuation Issues
Determining the value of foreign property can be complicated due to:
- Currency exchange rate fluctuations.
- Different appraisal standards across countries.
- Difficulty discerning owners.
- Difficulty accessing reliable foreign financial records.
Courts require credible evidence of value, often through professional appraisals or expert testimony. If valuation is uncertain, the court may either discount the asset’s value or adjust the monetary award accordingly.
2. Jurisdictional Limits
Virginia courts have jurisdiction over the spouses, but not over foreign property itself. While they can order a spouse to transfer funds or execute documents, they cannot force a foreign government to enforce these orders. Instead, courts typically structure settlements so that one spouse retains the foreign asset, while the other receives an equivalent share of U.S.-based assets.
3. Enforcing Virginia Court Orders Abroad
Enforcing a Virginia divorce judgment in another country depends on that country’s laws. Some nations recognize U.S. court orders, while others require a separate legal process to enforce them. If a spouse refuses to comply with a court-ordered transfer of foreign assets, the Virginia court may:
- Issue a monetary award as compensation.
- Impose liens, wage garnishments, or asset seizures on domestic property.
- Hold the non-compliant spouse in contempt of court, leading to fines or other penalties.
4. Hidden or Concealed Assets
It is not uncommon for a spouse to attempt to hide assets overseas to shield them from division. Virginia courts require full financial disclosure, and if a spouse is suspected of concealing property, forensic accountants and financial investigators can track international transactions. Courts may also draw adverse inferences against a spouse who fails to disclose assets, potentially awarding a larger share of the known marital estate to the other party as a penalty for dishonesty.
Using Discovery and Depositions to Uncover Hidden Assets
Virginia law provides legal tools to compel a spouse to disclose foreign assets during the divorce process. Two key methods include discovery and depositions, both of which require truthful, complete responses under oath and carry serious consequences for noncompliance.
- Discovery – The formal process through which attorneys request information, documents, and financial records. A spouse must fully disclose all relevant information in response to written questions (interrogatories) or document requests. Failure to comply can result in court-imposed sanctions, including monetary penalties, evidentiary restrictions, or additional relief in the final asset division.
- Depositions – A sworn testimony process in which a spouse must appear at a designated time and place to answer questions under oath, typically before trial. This allows attorneys to ask detailed questions about overseas holdings and financial transactions. While similar questioning can occur at trial, depositions provide more time for in-depth examination, making them a valuable tool in uncovering hidden assets before a court ruling.
By leveraging these legal tools, an attorney can force a spouse to disclose all financial assets—domestic and international—preventing marital property from being unfairly withheld from the equitable distribution process.
How Virginia Courts Divide Overseas Property
Since Virginia courts cannot directly transfer foreign property, they use alternative methods to ensure fairness, including:
1. Offsetting Assets
The most common approach is offsetting the value of overseas assets with U.S.-based property.
- Example: If one spouse is awarded a vacation home in France, the other may receive an equivalent share of Virginia real estate or a higher portion of financial assets.
2. Monetary Awards
Virginia law allows judges to issue monetary awards to compensate for an overseas asset a spouse retains. If an asset cannot be easily liquidated or transferred, the court may order one spouse to pay the other a lump sum or structured payments over time.
3. Court Orders Requiring Cooperation
A Virginia judge may order a spouse to sign necessary documents to transfer foreign assets. If the spouse refuses, the court can appoint a special commissioner to execute the transfer on their behalf. However, whether the foreign country will recognize and enforce such a transfer depends on its legal system.
Strategies for Divorcing Spouses with International Assets
1. Ensure Full Disclosure
Foreign assets must be disclosed in financial affidavits and divorce proceedings. If you suspect your spouse is hiding assets, legal tools such as subpoenas and forensic accountants can help uncover them.
2. Obtain Professional Valuations
Engage international appraisers or financial experts to accurately value overseas properties, businesses, or accounts. Convert values to U.S. dollars using the court-approved exchange rate.
3. Negotiate an Asset Trade
If dividing a foreign asset is impractical, negotiate a trade-off—one spouse keeps the overseas property while the other receives an equivalent share of assets located in Virginia.
4. Secure Payments with Liens or Escrow
If a monetary award is issued, the receiving spouse should seek liens, trust agreements, or escrow accounts to ensure payments are made. Courts can also impose penalties for non-payment.
5. Work with International Legal Experts
If you own significant foreign assets, consult legal and tax professionals in the relevant country to ensure compliance with local laws, avoid tax penalties, and facilitate smooth asset transfers.
Bottom Line
Virginia courts do not ignore overseas assets in divorce but handle them strategically to ensure a fair division. While foreign property may present unique legal challenges, courts use monetary awards, asset offsets, and financial penalties to distribute marital wealth equitably.
If you or your spouse own assets abroad, working with an experienced Virginia divorce attorney is essential to protect your interests and navigate the complexities of international asset division.
Contact an Experienced Virginia Divorce Attorney
Randall J. Borden provides professional guidance on Divorce, ensuring your case is presented effectively. If you’re considering or going through a Divorce, contact us today. Let us help you navigate this process to achieve the best outcome for you.