Divorce and Separation for US Nationals in the UK
The world today is a global village. So many separating couples have international elements to their relationship. They may work or live abroad, own assets in different countries, or hold multiple citizenship. Ending a marriage can be difficult at the best of times, but getting an international divorce can present additional complexities.
If you are an American living in London and are contemplating divorce, it is essential to get advice and plan ahead. You will have options as to where you can divorce. You don’t have to divorce where you were married.
Divorce law differs significantly between countries which will greatly impact the financial outcome. The financial outcome of an American divorce is likely differ to a UK divorce. Sometimes there may not be a clear-cut option when deciding how best to proceed. Therefore, planning is important. Be sure to get advice so that you choose the favourable jurisdiction to divorce.
American Divorce: Where to Divorce as a US Expat in the UK
You can get divorced in England even if you were married abroad. You just have to meet the jurisdictional criteria. This can be where you are habitually resident and/or where you are domiciled. If you are a US expat, you can divorce here if you or your spouse have lived in England for 12 months. You don’t have to have registered your marriage in England to divorce here.
Alternatively, you may be able to divorce in the US in the state that you or your spouse has a connection to. Each individual state – not the federal government – has the power to grant your divorce. This state may also decide issues about your children and finances.
However, it may be that both England and the US have jurisdiction to deal with your divorce. In which case, how do you decide which country is best for you?
There are some key considerations when making your decision:
- What assets will be taken into account and how might they be divided
- Will pensions be considered in the assets
- Is the financial settlement going to include any property you hold abroad
- How might share options and restricted stock units be treated during divorce
To help you figure out where to start, Expatriate Law will provide you with expert advice and support. We liaise with legal contacts across all states in the US. By doing this, we help you weigh up the practical and legal advantages and disadvantages when choosing whether to divorce in England or the US.
When divorcing in England, your worldwide assets will be taken in to account. Each asset will be valued, with professional help if needed. Once valuations are complete, consideration will be given as to how assets can be divided. In England, the starting point is equality. There can be factors that shift the division from equal share in favour of one party. Different principles can apply in short marriages.
We can advise you on how best to proceed with separation of assets of any nature. We will advise whether certain assets constitute ‘matrimonial property’ and how best to ascertain the value of such assets as well as what your best outcome is likely to be.
As the world becomes more interconnected and international relocation becomes more common, so the holding of foreign pensions will become more frequent. Pensions can make up a significant proportion of family assets and particular care is needed in relation to securing enforceability of any UK order over this asset category in the US. We can liaise with attorneys in the relevant state and court to make sure the financial order is upheld and you get your full share of divorce settlement.
The division of any qualified retirement plan (usually a pension that has been established by an employer or that has been classified as a 401(k)) held in the US will require a QDRO, a “qualified domestic relations order”. This is a court order requiring that a portion of a qualified retirement plan be assigned or paid to another person in the case of a divorce. A pension sharing order granted by the English courts under divorce proceedings can be converted into a QDRO in collaboration with the relevant pension company to ensure it is accurately drafted and enforceable.
The division of any individual retirement accounts (“IRA”) is effected by a process called “transfer incident to divorce” and can also form part of the US court order.
QDROs can trigger complex tax liabilities and it is important to seek out expert advice early on in the divorce process.
We work closely with family lawyers in the US to ensure that the transfer of a US 401(k) or IRA can be effected properly following UK divorce proceedings.
US Real Estate
Foreign property including property based in the US will also form part of a financial settlement within English divorce proceedings. If values for the property cannot be agreed, independent valuations will be obtained.
Divorce does not always involve the sharing of all assets. Often, one party will retain a property in entirety, in lieu of another family asset. This type of settlement is important when avoiding unnecessary tax obligations. We work closely with tax and financial advisers in the UK and US to ensure that the financial outcome on divorce is tax efficient for both parties.
Share Options and Restricted Stock Units
A restricted stock unit (RSU) is a method of employee compensation where company shares are received subject to a vesting period. RSUs are often used by US companies. Our lawyers will advise how share options or RSUs are treated within English divorce proceedings.
Where to Start?
You may have separated or remain with your partner but wish to reassure yourself with proper advice. We offer a confidential consultation for US expats living in the UK, or British expatriates living in the US. This can take place in person at our London office or via Zoom.
It is important to note that when divorcing in England, court proceedings are often a last resort. There are many options for an amicable and cost effective resolution of family law matters such as mediation or arbitration. Our lawyers will discuss these options with you from the outset.