This article was first published by Solicitors Journal on 04/05/16, and is reproduced by kind permission.
Keeping financial secrets an ocean away is as prevalent in family law as it is in offshore banking, but is anyone really surprised?
Considering how widespread the coverage of this unprecedented information leak has been, there is probably no need to go over the details again. It has made the general public more aware of what the super-rich do with their fortunes.
I suspect few divorce lawyers were surprised. For years we have dealt with people secreting their fortunes in elaborate overseas trusts so their spouse does not receive a share when they separate. These offshore accounts are designed to be opaque so they can withstand the scrutiny of an English court.
It can be incredibly frustrating to deal with the expensively retained trustees and lawyers of overseas interests, who will often dig in their heels when faced with English court orders. They give away as little information as possible and may claim that the assets do not belong to the spouse in question, or that their country’s laws do not require them to cooperate fully. Any lawyer who has wrestled with this issue will understand how difficult it can be.
There have been many high-profile examples of spouses hiding divorce assets in recent years, including Prest v Prest, Scot Young, and the husbands of Alison Sharland and Varsha Gohil. Attempting to hide assets during a divorce is not a new phenomenon.
So, what do the Panama Papers really tell us about divorce? For those of us who deal with clients whose partner has hidden assets in offshore accounts, the leak doesn’t tell us anything we don’t already know, even if the final details are new. However, the greater public awareness of the lengths to which some people will go to keep as much of their money as possible can only help those planning a divorce from a wealthy spouse. At least now they will have a greater awareness of just what they could be up against.
The revelations must also feel like an early Christmas present for spouses around the world, who now find themselves furnished with evidence that they were cheated out of a fair divorce settlement. It is right there in black and white, and they could now return to court and ask a judge to aside their original financial settlement, order that their former spouse pay all their legal costs, and face brand new financial orders.
What will the legacy of the Panama Papers be? Some wealthy people may have second thoughts about offshore arrangements, but not many I suspect. If anything, the people who are willing to take the risks inherent in such wealth protection measures will become more determined than ever. They will simply find ever more complicated schemes to conceal the true scale of what they own and, before you know it, the secrets will accumulate once again.
As fascinating as the leak has been, I foresee business as usual.
Originally posted here.
