Solicitors Journal: How much of a rise have you seen in disputes over the value or tracing of assets since the beginning of the recession?

RGL: There has certainly been a steady rise in disputes in value terms and the requirement to trace hidden assets. The recession has created a lot of uncertainty for couples which can inevitably lead to stress over personal fi nances. This can mean that, instead of agreeing a settlement, the aggrieved party feels the other party should be made accountable.

The global accessibility of fi nancial and other asset markets has inevitably required more sophisticated techniques to trace those assets.

SJ: What are these disputes usually about and are they getting more complex?

RGL: Disputes normally centre on what assets should be included in the matrimonial pool but also what they are worth. In terms of the former, common issues relate to pre-marital property, inheritances and businesses which one or both parties have worked hard to build and grow.

The valuation of private family businesses brings its own complexities in terms of, for example, sourcing comparables. In addition, where the main value of the asset pool is that business, complications can arise in evaluating and providing the basis for the funding of the divorce settlement.

SJ: Have you seen more assets being placed into trusts or companies, and how many are outside the UK courts’ jurisdiction?

RGL: It is not unusual for property, life insurance, shares and other fi nancial assets to be placed in a trust fund or offshore company to help protect them for benefi ciaries or avoid unnecessary inheritance tax. They are becoming a more common tool to hide assets as it can prove challenging to pierce their corporate veil.

In our experience, there has been a marked increase in assets being placed in jurisdictions that have strong privacy legislation and high levels of protection – for example, in the Cook Islands, Nevis and Belize.

SJ: Where do you start when, as in the case of Prest, the claimant alleges the defendant is hiding matrimonial assets in companies held in his name?

RGL: The Prest case means that spouses cannot deliberately hide assets in businesses and corporate structures to protect them in the future, in the event of divorce. The starting point in any investigation will be the client – they can be an important source of data intelligence.

Corporate accounts will only provide limited insight into any hidden matrimonial assets held. However, use of corporate, property and share registers will assist in initiating any fi nancial investigation. It is not unusual for us to expand investigations cross-border, navigating through corporate shareholdings to ascertain who the ultimate shareholder is and thereby ascertain their fi nancial worth.

SJ: Has it become more diffi cult to trace and assess the value of certain assets such as property or company shares?

RGL: The globalisation of the economy, the digitalisation of data and the expansion of fi nancial services has certainly made it easier to invest funds more diversely – both in terms of where in the world, legal jurisdictions and fi nancial vehicles.

Transferring assets to third parties, trusted relatives or friends will also make following the money trail more diffi cult. However, the internet, asset registers and time-honoured forensic curiosity and intuition all contribute to discovering hidden assets. The valuation of an unquoted, family businesses that cannot be simply “marked to market” like other assets is always challenging.

SJ: What are the additional hurdles with international claims?

RGL: International claims inevitably are more complex – both in terms of time, geography and intelligence resources. It is important to recognise that there can be important differences in corporate and data protection laws between jurisdictions which can either assist or hinder investigations.

One common hurdle, for example, to be found tracing assets in certain Caribbean jurisdictions is that formation agents set up companies such that the names of ultimate shareholders and directors do not have to be recorded in public archives, making the tracing of the individuals and their assets more diffi cult.

30 SJ Expert Witness Supplement Summer 2013 www.solicitorsjournal.com

brought to you by RGL Forensics

The increasing complexity of asset tracing in family disputes

James Stanbury is a partner and Charlotte Haslam an investigations manager at RGL Forensics, a leading forensic accounting fi rm with 23 offi ces worldwide. (www.rgl.com)

The rise in the number of individuals moving assets into offshore vehicles brings a new set of challenges for forensic experts advising parties to divorce proceedings, say James Stanbury and Charlotte Haslam

Diamonds are foreverUnfortunately, the same can’t always be said about marriages…

RGL works closely with intermediaries and clients to provide forensic accounting services in matrimonial cases. Our accounting and investigation experts understand the importance of obtaining the full financial picture to achieve a fair settlement. We gather and evaluate financial evidence, look to uncover hidden assets, determine the value of businesses and undertake reviews of liquidity and funding.

At RGL, we understand that the breakdown of a relationship is often complicated and sensitive. The financial implications of a settlement can have a significant impact on our clients and we aim to find a fair and practical solution. Our approach gives clients control over the process, allowing the cost of any investigation to be weighed against its potential gain.

rgl.com