Legal Translation for Matrimonial Cases
We’ve blogged about the need for certified translation services for foreign divorces. Legal translation services also play an important role in a divorce involving a foreign spouse or a spouse who holds dual citizenship. One intriguing wrinkle in a divorce that has an international aspect is the danger of undisclosed foreign assets. In other words, a spouse may be putting money away in a foreign bank account that is not disclosed either during the marriage, or during divorce proceedings.
Legal Translation to Uncover Undisclosed Assets
Someone keeping something from his or her spouse during a marriage? Shocking, right? All sarcasm aside, a lawyer with forensic accounting resources and a professional legal translator can be key players when handling a divorce that presents the possibility of undisclosed foreign assets.
Overall, divorce is an incredibly challenging area of the law. Lawyers typically do battle in a courtroom. But in divorce cases, the people who get along the best in court are the lawyers. That is because divorces can be full of emotion, resentment, and acrimony. The parties are sorting through years of issues, and unresolved feelings. As any family lawyer will tell you, unwinding the assets in a marriage, particularly a union with a sizeable estate, is a tall order indeed.
Accordingly, this article will discuss the various aspects surrounding the tax and other consequences of a divorce that involves unreported, or undisclosed foreign assets. We will first touch upon finding foreign assets, and then move to the reporting requirements once the assets are found. Finally, this article will discuss the issue of the “innocent spouse” and the ways that lawyers deal with the possible penalties surrounding undisclosed foreign assets.
Of course, the only way a family attorney can navigate these complicated waters is with the help of an experienced, professional legal translator. Without the ability to understand foreign documents regarding the undisclosed assets, you and your client will be at a significant disadvantage. Consider contacting the linguists at All Language Alliance, Inc. Having handled translations in many, many matrimonial cases, we are the experts on helping you understand the meaning of many technical financial documents. Email us for more information by filling out “Translate All Languages” form on the right.
1. Finding Foreign Assets that May Be Undisclosed Marital Assets
Typically, income generated or assets obtained by either spouse during a marriage are included as marital assets. But what happens when a spouse is not fully forthcoming with all of his or her assets during the marriage?
Consider for example, when one spouse who owns a business asks a customer to pay into a foreign bank account, and that account is not disclosed to the other spouse. That could be a significant amount of money of which the other spouse is unaware. In the case of divorce, an attorney would be wise to employ a good forensic accountant and a reliable legal translator to conduct a careful review of the other party’s bank statements and financial transactions for any foreign assets.
2. Reporting Requirements for Foreign Assets
The United States taxes income regardless of whether it was earned in the U.S. or outside of its borders. While one most likely can obtain a tax credit for foreign taxed paid, a person still has the obligation to report worldwide income.
Such a requirement includes disclosure of assets overseas, including foreign bank accounts. Therefore, even if no money was earned or received in the U.S., a person with foreign assets must still disclose them to the Internal Revenue Service. Moreover, a taxpayer who fails to report or pay tax on income from a foreign source will be subject to the same tax penalties that apply to the failure to pay taxes on domestic income. If a forensic accountant does uncover previously undisclosed foreign accounts during a divorce, the next question is whether there are penalties to be paid.
3. The Concept of Willfulness
The size and severity of the penalties to be paid for previously undisclosed foreign assets largely depends on whether one or both spouses acted willfully. Willfulness is defined as “an intentional violation of a known legal duty.” If a person acted willfully, then criminal consequences, or at least huge civil penalties, are possible.
4. What are the Options if a Party Has Failed to Report Foreign Assets?
There are essentially four options. The spouse or couple could (i) do nothing, (ii) begin filing accurately for current and future years, (iii) file an amended return to fix some past years, or (iv) make a formal voluntary disclosure of the failure to disclose in prior years.
Of course, the correct option depends on the circumstances of the case, though doing nothing is most likely the riskiest, and worst, option of the four. With regard to formal voluntary disclosure, that is worthwhile particularly if it allows a person to avoid any criminal exposure.
5. “Innocent Spouse” Issues Specific to a Matrimonial Case
When undisclosed foreign assets are discovered in a divorce case, the issue becomes the severity of the consequences, and its impact on each of the spouses. First and foremost, the immediate question is whether both spouses knew of the asset, or did one spouse hide the asset from the other. In that latter case, it is possible that “innocent spouse” relief may be available to the unknowing spouse, particularly when penalties for the non-disclosure could be joint and several.
In sum, when undisclosed foreign assets are discovered during a divorce, it is important for attorneys to understand the possible consequences to both spouses, and have a legal translator on hand to decipher the foreign asset documents behind it all.
We welcome you to contact All Language Alliance, Inc., to learn more about how we can help you translate any kind of technical legal or financial document from Simplified Chinese, Russian, French, Spanish, Traditional Chinese, Portuguese, Arabic, and other languages.
We handle myriad languages and pride ourselves on accurate, reliable service. Contact our legal translation service today.
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