In 2022, it was reported that North Carolina was one of the most popular states for foreign real estate investors, attracting almost 100,000 buyers that year. This helped the Tar Heel State claim the fifth spot on the list of most popular states for foreign buyers. But the sword cuts both ways, and North Carolina residents may also invest in various forms of foreign property. While there are many complex assets that may come up during property division in a North Carolina divorce, foreign property poses many unique issues. Understanding these issues is helpful for spouses approaching divorce, particularly high-net-worth individuals with overseas holdings.
Foreign Nations May Not Enforce American Court OrdersMany nations across the world have treaties with the United States involving court orders and the disclosure of property. If the foreign property involved in your divorce is held within one of these nations, then a spouse may obtain a court order requiring the disclosure or transfer of the assets in preparation for the equitable distribution process.
But it is important to remember that not all countries have these treaties with the United States. In fact, many spouses specifically choose nations that do not have treaties with the United States as they hold, obtain, and transfer assets. The incentive for doing so is obvious: It is easier to conceal these assets from a wide range of parties, including ex-spouses or even the IRS.
Here are a few examples of countries that do not have property-disclosure-related treaties with the United States:
There are many other nations, and these are simply some of the most well-known and popular.
Should I Disclose Foreign Assets in a North Carolina Divorce?Even if your assets are held in a nation with no treaty requirements to disclose these assets to an American court, it is recommended to do so anyway. This is because failure to disclose assets may result in serious financial and legal consequences. Concealing assets is a serious example of financial misconduct, and it may affect various aspects of your divorce, including custody, alimony, child support, and of course, property division. In some cases, you may even be charged with contempt of court for failing to disclose these assets, and most lawyers would agree that this is a risk not worth taking.
The Value of Foreign Assets May Be Taken Into AccountEven if courts in North Carolina cannot force you to sell foreign assets with a court order, they can still take into account the value of these foreign assets when making calculations regarding alimony, child support, and property division. You may be required to “trade” assets of equal value that you hold within the United States if it becomes clear that you hold other assets overseas.
Foreign Assets Require Foreign ValuationIt can also be quite difficult to value foreign assets. Even financial experts in the United States may struggle to understand the various tax implications, regulations, and financial systems of a foreign nation. Therefore, it may be best to enlist the help of foreign nationals in the country where the assets are held. This process may be expensive, time-consuming, and complicated. However, it may prove to be profitable. For a spouse trying to get access to these assets, a higher valuation is beneficial, while the opposite is true for those who hold these assets.
Popular Foreign Assets for North Carolina ResidentsA number of foreign assets have proven to be especially popular among American residents. Examples include foreign bank accounts, including the infamous “offshore accounts” located in various tax havens. Another popular foreign investment is real estate, either as a pure investment or an income-generating rental home. Some also use their foreign real estate as vacation homes. For the financially-savvy North Carolina resident, there are many international markets that offer unique, interesting investment opportunities.
Where Can I Find a Qualified Divorce Attorney in North Carolina?If you have been searching for a divorce attorney in North Carolina, look no further than Arnold & Smith, PLLC. Over the years, we have helped numerous spouses approach the equitable distribution process with a measure of confidence and efficiency. We know that many complex assets may arise in these divorces, especially in high-net-worth divorces. Foreign assets represent just one example of complex property that may pose issues, and there are many others. Contact us today and book a consultation to approach these complex assets efficiently.