08 July 2020 - Events
Britain is divorcing the European Union. It has been a long marriage of 43 years and while the usual 50:50 starting point for division of assets won't apply in this case, sorting out the financial split will be no mean feat. While Britain and the EU did make it past their ruby wedding anniversary, neither party seems to think there is much to celebrate now. Even though 51.9 per cent of Brits voted to leave, few seem to be congratulating themselves on a job well done and the perception emanating from the Land of Hope and Glory is one of fear and uncertainty. And the unease doesn't start and end in Britain – Hong Kong is brimming with people, not least British expatriates, with investments in UK property and assets. So what will it mean if you decide to HK-exit your marriage?
Given that family law in Hong Kong largely follows the lead of England and Wales, Brexit is unlikely to directly impact Hong Kong divorce law for some time to come. There are no doubt countless ways in which EU membership has influenced family law-related legislation and judicial decision making over the years in England and Wales. However, any social or economic consequences that Brexiting has for the principles that shape family law will take some time to filter through into the echelons of the English legal system. In any event, Hong Kong maintains its autonomy to decide its own law and, if England and Wales now depart from how the law has evolved to date, Hong Kong needn't necessarily follow. So like night follows day, your decree absolute will still follow your decree nisi.
However, the pound plummeted as the votes came in and it is almost a given that the banking and finance sector will suffer significant and lasting effects, with another recession on the cards. As the world discovered during the credit crunch, the domino effect of such a crisis is long-and-wide-reaching and it is not just CEOs of investment banks who will feel the ricochets – the average man on the Clapham omnibus may have a bumpy ride too.
The possible effects should not be overlooked. Are you getting divorced in Hong Kong but you own property in London? Brexit may have affected the value of your pad and getting an up-to-date valuation before signing that financial settlement may be advisable. Do you intend to move to Cornwall after the divorce for a fresh start? That cottage by the sea you weren't sure you could afford out of your settlement, may now be more obtainable if loan rates fall, as predicted. How about the pension you had accumulated when you left rainy Wales and moved to what you naively assumed would be less rainy Hong Kong? Most private pensions will be tied into long-term investments so if you have some time before the pension will pay out, the end value may not be significantly affected. Nonetheless, the value of that pension on the day your divorce finances are settled may be crucial. And if you had visions of enjoying your newly single status using your British passport to live and work in a continental European city, it may not be quite such a carefree choice anymore, not least because you will no longer be able to skip the “foreign passports” queue.
Don't let the Brexit divorce make your divorce an acrimonious one – get advice as to what the practical considerations for you may be, before you sign on that dotted line.
The article was originally published online in Wealthbriefing Asia on 18 July 2016.