Passion assets and divorce disputes in Hong Kong, Singapore and England & Wales: valuation, disclosure and hidden wealth

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Divorce proceedings involving valuable collections and collectible assets can quickly become legally and emotionally complex.

Unlike conventional investments or bank accounts, collectible assets often carry both financial and sentimental significance. A family heirloom, rare watch collection, luxury vehicle or artwork may represent decades of emotional attachment, family history or personal identity.

At the same time, many collectible assets are difficult to value, highly portable and sometimes held across multiple jurisdictions or ownership structures. As wealth diversification continues to evolve across Hong Kong, Singapore and England & Wales disputes involving collectible assets are becoming increasingly common in family proceedings.

Financial disclosure obligations on divorce 

Once the marriage has broken down and the petition/application filed, there are often issues as to disclosure and also attempts to sell, gift or otherwise transfer valuable assets out of the spouse's name to third parties.

During the divorce process, both parties have a duty to the court to make a full and frank disclosure of all of the assets currently held in their sole names as well as assets held in joint names. This includes bank accounts, investment portfolios, trusts, inherited wealth, and valuable collectibles such as artworks, jewellery, luxury watches, wine collections, classic cars, designer handbags, etc.

Where collections are substantial, parties may also need to disclose insurance records, acquisition histories, storage arrangements and ownership structures.

One of the most challenging aspects of collectible asset disputes is valuation. If the family owns a valuable artwork or heirloom, the court will require a valuation. Parties regularly disagree on the valuations given and each may put forward reports by their own expert valuer. To avoid this, the court prefers the appointment of a single joint expert who can act for both parties in coming to an agreed valuation. Costs can rise significantly over contradictory expert valuations. In Hong Kong, the experts would be required to attend court for cross examination, and the final decision is made by the Judge on the basis of that evidence. If the valuation can be agreed, it can limit the costs significantly.

Items such as artworks are also emotive. Both parties may desperately want to keep a special piece of art. In practice, this is a matter for negotiation and even discrete mediation.  If there are a number of artworks in a family collection, parties or the court will have to decide whether the collection should stay together, or whether each party should take it in turns to choose a piece until the collection has been divided as fairly as practicable. In our experience, it is advisable to settle all matters relating to these emotive items as soon as possible. It has been the case that all matters have been settled: children's issues, asset division, including share and property transfers, but the settlement has fallen at the last hurdle over a single piece of art.  

Other practical issues such as insurance for the artwork and maintenance should not be ignored, and the costs of transfer, if the piece is vulnerable, should be taken into account. In certain circumstances, experts will be required to assist here too.

Hidden assets and suspicious transfers 

Valuable movable assets can sometimes create opportunities for concealment or dissipation. Generally, it is more difficult to hide a very valuable asset such as a piece of art (although it is not uncommon for items of jewellery to go 'missing'), but it may be that parties may try to transfer the item to a third party, particularly a family member. It will be open to the other party to make an application to court to set aside any transfer made with the intention of defeating their financial claims.

In Hong Kong and England & Wales, if the transfer is made within 3 years of the divorce, there is a presumption that the transfer was indeed made for that purpose and it is for the transferring party to prove otherwise. If the transfer is made prior to that, there is no such presumption. The court has the power to stop such a transfer or to set aside the transfer, so long as it is not a disposition for valuable consideration in favour of a third party acting in good faith without notice of any intention to defeat a claim. In such circumstances, it may be difficult to get the artwork back, but the proceeds of sale would be taken into account.

In Singapore, the Court similarly has the ability to reverse transactions that took place within 3 years prior to the commencement of divorce proceedings, if the transaction has the effect of impacting the other party’s entitlement to maintenance or their share of the assets in the division exercise. If ownership of the specific asset is significant, the Court can reverse the transaction. If the asset is not significant in and of itself but is of significant value, the Court has the power to notionally return the value of the asset to the pool of assets for division.

Courts have powers to address transactions intended to defeat matrimonial claims. In appropriate cases, courts may freeze assets; restrain sales; reverse certain transfers; or take suspicious transactions into account when determining financial outcomes. This can get more complicated if the assets are cross-border, and international families often hold assets across multiple jurisdictions.

Cross-border families with connections to England & Wales, Hong Kong and Singapore increasingly require coordinated legal advice spanning family law, private wealth, trusts and international asset structuring.

Early planning often reduces disputes

Many of the most difficult disputes involving collectible assets arise where there was little prior planning regarding ownership, succession or documentation.

Nuptial agreements, clear structuring, record keeping and succession planning can significantly reduce uncertainty if relationships later break down.

This is particularly important for internationally mobile families with valuable collections spread across multiple jurisdictions.

As collectible wealth becomes increasingly mainstream among affluent families, disputes involving passion assets are likely to become more common.

In summary, artworks and items of actual and sentimental value require specialist advice in the event of divorce and in anticipation of divorce. These discreet assets are often of importance, not only to the parties but to their wider families and dealing with them requires knowledge, expertise and tact.

This article is part of a three-part series on marriage, divorce and valuable assets in Hong Kong, Singapore and England & Wales. Read our related articles on protecting inherited wealth before marriage here and safeguarding valuable collections during marriage here.

If you would like advice on protecting family wealth, structuring valuable assets or navigating cross-border family and succession issues in Hong Kong, Singapore, England & Wales or internationally, please get in touch with our legal experts.