Freezing Orders and Offshore Family Assets: What You Should Know

When there is a high-value family disagreement, assets that are not limited to one place are often at stake. Properties in different countries, complicated trusts, and bank accounts in other countries are becoming more and more common in divorce and financial relief cases. There may be good reasons for these arrangements, but they also provide one person with a means to hide or lose money. In such situations, judges may use a freezing order, which is a powerful tool.

Someone can’t sell or move assets until a disagreement is over, thanks to a freezing order, which is also sometimes called a Mareva order. Its goal is not to punish, but to maintain the status quo so that a judgment has real meaning if it is given.

What Are Freezing Orders?

A freezing order is a court order that says someone can’t touch certain assets, like bank accounts, land, or shares, while the case is still going on. This safety measure makes sure that assets are still available to pay any award that may come up.

For a detailed explanation of freezing injunctions and the legal process involved, see this expert guide.

Why Offshore Assets Matter

Offshore assets complicate family law cases in their own way.

• Harder to trace: It’s harder to determine who owns them because they may be located in more than one place, and there are rules regarding privacy.
• Easier to move:  It’s easier to move money around because transfers can happen quickly between foreign banking systems.
• Subject to different regimes:  Different laws recognise judgments and orders in very different ways.

Imagine one partner sending money from the marriage to a trust in the Cayman Islands right before the divorce process starts. If you don’t get help right away, those assets might be out of reach by the time the judgment is made.

Legal Framework and Tests

Courts don’t give out freeze orders all the time. To succeed, an applicant must usually demonstrate:

• A solid argument that makes sense on its own merits.
• There is a real chance that assets will be lost, stolen, or moved to avoid being collected.
• That getting the court involved is fair and proper.

People often make applications without telling the other side about them. This means that the person making the application must provide a “full and frank disclosure” of all essential facts, even if some of them are not beneficial to their case.

Offshore fights raise the bar even higher, applicants must show strong proof and expect that enforcement will be rigid when it happens abroad.

Freezing Orders in Family Law

In split families, to maintain the value of some of the assets, cash, or property, they are termed ‘freezing orders’ due to the nature of a divorce or a civil dissolution. There are actions which warrant judicial action, especially where one party to a marriage is suspected of attempting not to honour their financial obligation by disposing of their property well below market value or sending funds offshore.

In all the Courts in the world, these types of orders are far and few between. There is a need to demonstrate some form of crime or an immediate threat to life and limb. See interim injunctions guidance. It is these orders that the Courts make which are important in order the defend the claim of the equalisation of wealth distribution.

Practical Challenges

There are plenty of legal complications when it comes to freezing family funds outside the country.

Gathering evidence: the work of forensic accountants, along with specialists in asset capture, is to identify and disentangle cross-border money.

Jurisdictional constraints are: some foreign courts are, to a lesser extent, unprepared to obey orders to freeze assets remaining in the country of the United States.

The possibility of overreach: there are claims that restraint orders, which are indiscriminately issued, are, in the most literal sense, excessively punitive.

These issues highlight the pain of attempting legal DIY and the need to timely act. For instance, the assets could vanish in a particular period of time.

Conclusion

If there is a contentious issue regarding family funds that are located out of the country, a freezing order is an option worth considering. It preserves some assets for enforcement that might otherwise be transferred or squandered. 

But time is of the essence, and that is equally true for the evidence and the legal cross-border issues that must be addressed in order to get an enforcement order. Experienced family lawyers and wealthy clients understand this. The point is to have a global outlook in asset protection and be prepared to implement freezing orders when litigation arises.