High Net Worth
Judge Is Critical Of Family’s Financial Practices In High Asset Divorce
It’s not uncommon for divorces involving high-assets to be complicated. They can include complex property and asset division, as well as hidden assets. In a move not typically seen in the courts, a judge recently offered critical words to a husband and wife who were going through a divorce but were keeping assets overseas in order to shield them from Canadian taxes.
The relationship between the husband and wife began in Singapore in 1984 when the husband was working as a neurologist and the wife was training to be a nurse’s assistant. They were both married at the time, but had a child together in 1987. They were still married in 1993, which is when the husband began supporting the wife and their child. They began living together in 1994 and divorced from their spouses in 1995 or 1996. They were married in Singapore in 1997. They had a second child in 1999.
The family is very wealthy and live a lavish lifestyle. Most of their income comes from the husband’s medical practice, which is operated by a corporation (“the corporation”). He is the sole director of the corporation. The wife started worked long before the divorce proceedings started.
The family decided to relocate to Vancouver in 2003, applying for permanent residency. They purchased a large home in Vancouver in 2004. Ultimately, the husband decided to remain in Singapore to continue his work, while the wide and children remained in Canada, though he did visit from time to time. He supported his family with money made and taxed in Singapore.
The house was put into the wife’s name. The court believed this was so the husband could avoid being seen as being financially active in Canada. While the wife earned a small amount of money from investments in Canada, the family continued to be supported from husband’s corporation in Singapore.
The family amassed a large real estate portfolio. In addition to their home in Vancouver, they also own a downtown Vancouver condo, a ski chalet at Big White Ski Resort, a ranch in Merritt, a condo in Toronto, a condo in Florida, five properties in Singapore, and a condo in Thailand. There was also suggestions that the husband had an interest in a property in Malaysia. The estimated value of the properties is about $50 million.
Criticism for tax avoidance
The bulk of the issues making up the case were unremarkable, dealing with spousal support, child support. The husbands income, coming from Singapore, wasn’t especially complicated, but the judge was critical of the family’s decision to benefit from a life in Canada without contributing to its tax base, writing,
“I accept the (wife’s) evidence that the accounts which are used to fund the mortgage on their joint asset – the West Vancouver home – was purposefully put into her name so as to avoid any suggestion that the Respondent was financially active here and therefore, subject to Canadian and BC income tax. Accordingly, but for a small amount of income earned on investments in BC in the (wife’s) name, the vast majority of the family income has been earned elsewhere and presumably taxed elsewhere (if at all) – while the (wife) and (child) have enjoyed the many benefits of Canadian society, including (the child’s) attendance at the local public high school. Needless to say, this family has also now taken advantage of and sourced another valuable benefit in our society – our legal system – which is funded by Canadian and BC taxpayers.”
The judge was also critical of the effect the husband’s financial practices were having on the family, noting “the (wife’s) financial position has deteriorated to the extent that she has had to borrow funds from her son, in order to assist her in covering her legal and household expenses. In contrast, the (husband) has apparently continued to enjoy his extravagant lifestyle, with unlimited access to his overseas liquid assets. The (husband) does not appear to have suffered any financial consequences as a result of the separation.”
The court ultimately awarded the wife over $900,000 in interim child and spousal support, as well as over $400,000 in advanced legal fees.
The experienced and professional family law lawyers at Jason P. Howie, Professional Corporation have more than 25 years of experience handling divorce issues for clients with significant and complex assets. We provide our clients with the personal support and attention to detail needed to navigate what can be a complicated process. To speak with us, please reach us online or call 519-973-1500.