Divorce Overseas - Expatriate Issues

Introduction

Australia has clear, and comparatively easily satisfied, divorce laws. Provided you are either an Australian citizen, domiciled in Australia or have been resident in Australia for at least twelve months, you can file a divorce application once you have been separated from your spouse for no less than twelve months.

Consequently, for example, if you are an Australian expatriate living in London and you satisfy the citizenship requirement, there is no reason why you cannot file a divorce application in the Federal Magistrates Court of Australia if your marriage breaks down. The benefit of this approach is that in the UK the period of separation required for a no fault divorce is two years, rather than twelve months.

Court attendance in Australia

If there are no children under the age of 18, then you do not need to actually attend Court for the purpose of the divorce application - and hence there may be no need to return to Australia for proceedings. If there are children under the age of 18 involved, then you and your estranged spouse can also sign a joint application so there is no requirement for an appearance in Court when the divorce goes through. Note that the Court also has the power to waive the requirement that you attend Court.

Divorce and Property Settlements

It is important to appreciate that a divorce and property settlement are two different legal processes in Australia, although that is not the case in all jurisdictions. A divorce is the legal termination of a marriage, whilst a property settlement is the formal division of property following a couple's separation. Australia is an "equitable distribution" country, meaning that on the divorce or death of a spouse, net wealth is not split evenly (i.e. 50/50) as “community property”. This is one of the reasons why the jurisdiction in which a divorce is initiated is very important and needs to be addressed as a first priority.

Australian family courts consider the following matters when deciding how the property and assets in a relationship should be divided between the parties:

• The net asset pool of the parties
• The financial and non-financial contributions of both parties
• Various adjustment factors, including the future needs of the parties, and
• The practical effect of the proposed property settlement, and whether the settlement is just and equitable for both parties.

Appropriate Jurisdiction

One difficulty associated with obtaining a divorce overseas can be, in certain circumstances, that if you are divorced in a particular country you can only have your property proceedings in that country. There is no such restriction in Australia as of right, but if you are in a country where the property settlement is governed by where you are divorced, the other party could bring an application to restrain you from proceeding with a property settlement in Australia. Similarly, you may not be able to rely upon existing financial agreements, prenups or postnups executed prior to leaving Australia.

Jurisdictional Considerations

The differences in approach adopted by other countries is one of the reasons why an early assessment of the preferred jurisdiction in which a divorce is initiated is important. In that context, the following are some of the important considerations:

• If you have children, the way in which courts in the available jurisdictions approach child custody and parenting disputes
• The time it will take to get divorced and any pre-requirements, such as a minimum period of separation
• The approach taken in terms of the division of property and assets
• Whether the courts in the particular jurisdiction have the power and preparedness to issue injunctive type orders to prohibit the the transfer of assets out of the country and jurisdiction of the court
• Any issues associated with the enforceability of court orders in other overseas jurisdiction in which children may be resident, or assets located
• The cost of obtaining a divorce and other proceedings in a particular jurisdiction

Parties need to consider their options very carefully when it comes to choosing the jurisdiction they wish to initiate their divorce proceedings and what is in their overall best interests.

Enforceability and Tax Issues

It is common for expats to have assets both in Australia and other jurisdictions - and in that situation the Australian courts have the power to make property orders taking into consideration assets outside of Australia. However, the enforcement of those orders, which is particularly important if the bulk of the assets are held outside Australia, can be very difficult in practice - even in other Western jurisdictions.

The best course of action in these circumstances can also be dependent upon specific tax advice; particularly if the orders involve the sale of assets and potential capital gains. A very specific but important example includes an order for the sale of a main residence in Australia - such an order, if all the other requirements are met, may enable the avoidance of Australian capital gains tax on the sale of the property under what is called the life events exclusion. Additionally, superannuation funds will often be a large asset component and the "splitting" of funds will require an Australian court order.

Depending on circumstances, and particularly depending on where assets are located and the impact of local tax laws around CGT and inheritance, tax advice from a number of jurisdictions may be absolutely essential if you are to minimise any adverse tax consequences. Multiple jurisdictions also makes it more complicated to ensure that there has been "full and frank disclosure" of assets outside Australia, and sometimes this will require investigations in the overseas jurisdiction.

Exfin is experienced in providing access to, or arranging, tax and other professional advice in other jurisdictions.

Custody and Parenting Issues

Legal issues around the custody of children and parenting arrangements can be exceptionally complex, particularly if the parents have different nationalities and base countries, and can be impacted significantly by the country of residency.

Spousal Maintenance

Note that Australian courts will not usually include long-term spousal maintenance orders as part of a property settlement because one of the prime objectives is to finalise matters between the parties as much as possible - therefore, the property settlement is supposed to have regard for the "future needs" of the parties. This is in contrast to the approach taken in a some other overseas jurisdictions where there are substantial numbers of expat Australians, such as the UK and in the US where it can be referred to as "alimony".

Legal Process

In Australia the law with respect to a divorce is that, provided you satisfy the jurisdictional requirements and your documentation is correct, then a date is fixed for Court and your matter will normally proceed on that day i.e. the first return date. You will then normally receive a final Order for Divorce (it used to be called a Decree Absolute, but the terminology has now changed) one clear month (i.e. one month and one day) after the date you are in Court.

In practice, you will typically not really receive an Order until a couple of weeks after the date. You are then free to remarry, subject, of course, to the notice requirements under the relevant marriage legislation. This reference provides further details about accessing proof of an Order for Divorce after it has been granted.

Finally, note that Australia will recognise a divorce or legal separation obtained overseas - if it was effected in accordance with the laws of the jurisdiction in which it was granted. See Section 104(7) of the Family Law Act 1975 and note that there is no requirement, need or ability to "register" such a divorce in Australia.