Internationally owned assets present unique challenges during a divorce. As global holdings and investments have become more common for Nebraskans, so too have the complexities in equitably dividing international property. While each international asset presents its own unique challenge to divide in a divorce, some assets are more challenging to divide than others. And when significant amounts of marital wealth are held abroad, it is vital that divorcing spouses secure experienced legal representation to protect their interests.
How Are Internationally Held Assets Treated in a Nebraska Divorce?
Under Nebraska law, Nebraska courts may equitably divide all assets and debts acquired by either spouse during marriage, regardless of their situs, i.e. location of their acquisition and holding. However, it is important to note that for a Nebraska court to have authority to grant a divorce and divide property, at least one spouse must have been a bona fide resident of Nebraska for more than one year immediately preceding either spouse filing for divorce in Nebraska. This requirement may be problematic for spouses who reside at multiple residences throughout the year.
Three Common Challenges Concerning International Assets in a Nebraska Divorce
- Locating International Assets
For a Nebraska court to consider an international asset in a divorce, a spouse must prove, or the spouses must agree, that the asset exists. Depending on where the asset is located and what measures have been taken to conceal an international asset, the burden of evidencing existence may prove incredibly difficult. While Nebraska law provides a variety of discovery methods for spouses to locate international assets, such as the right to subpoena foreign entities to disclose such assets, whether such foreign entity must cooperate typically depends on whether the entities’ controlling government has entered into an enforceable treaty with the United States.
2. Valuing International Assets
Another issue common to international-asset divorces is determining the proper values of international assets. When values of property are disputed in a divorce, parties must typically rely on experts, such as real estate appraisers or forensic accountants, to evidence the values of property. In the case of international assets, experts must usually be hired at the site of the international asset and then properly secured to testify in a Nebraska court.
It’s also worth noting that if an international asset proves difficult to actually divide between spouses, then a Nebraska court may award such an international asset solely to one spouse while awarding an equivalent, divisible asset entirely to the other spouse. However, this may only be accomplished if the international asset’s value is properly evidenced.
3. Tax Consequences When Dividing International Assets
While the IRS does not consider the division of assets pursuant to a divorce to be a taxable event, this rule is not necessarily reciprocated by all foreign countries. For example, transfers of property pursuant to a Nebraska divorce decree are often considered post-marital gift transfers in India, and thus subject to gift taxation under Indian law. This is just one example of the many nuanced tax consequences that occur when dividing international assets.
Skillfully locating, valuing, and tax planning international assets is critical to successfully dividing property in a Nebraska divorce. This area of Nebraska law is nuanced and requires experience and advocacy to navigate in negotiations and trial. Our team at Koenig|Dunne has over 150 years of combined legal experience. We have authored books and published articles addressing complex property issues, and it is our mission to provide wholehearted, excellent support to our clients throughout the entire divorce process.