Puerto Rico Divorce Law & Act 20 / Act 22
Divorce or dissolution of marriage when a business is involved or there are substantial assets is always complicated. But for recepients of Act 20 and Act 22 there are even more complicating factors to keep in mind. High net for worth individuals who have relocated to Puerto Rico under Act 20 and Act 22 have an added layer of complexity with possible tax savings claw backs from Puerto Rico and back taxes and penalties from the IRS for repatriation of off-shore funds. In addition, now that a litigation is imminent you have the possibility that all your private information will become public such as your financial information, investments, assets, liabilities and yourwhereabouts will be put through a fine tooth come to deterimine residency in order to file for the divorce. In addition, having your whereabouts discussed in open court could reflect negatively or be miscontrued for tax purposes if you or your spouse traveled to and from the United States.
Residency for one year is required to file for divorce in Puerto Rico, if a person hasn't lived in Puerto Rico for one year, they cannot file for divorce on the island. This comes into play when a person is looking to file in another state, "forum shopping", in order to take advantager of a particular jurisdiction. Maybe in another state you can get permanent alimony, or alimony will not be presumed or awarded easily, maybe another state the child support age is 18 vs. 21 as it is in Puerto Rico. These factors can make the difference in having to pay hundreds of thousands of dollars in pensions and support. Filing the lawsuit in many instances can give a heads up to one of the litigants and that could set the case permanently in one state rather than another. That is why residency plays such a huge role in divorce cases and is one of the first things an attorney needs to analize before filing for divorce.
What happens if throught the divorce process you or your spouses travels gets scrutinized and that you has been traveling back and forth to the United States on a regular basis? Is it work related? Is it accounted for? Could an argument be made that you are not living in Puerto Rico even though you have Act 20 and Act 22? Is income being tracked between trips to be assigned to each destination of your business tripsThen you have the possibility that Hacienda or the IRS will conduct an audit or even worse. The IRS has been known to start criminal investigations for far less.
Then there are the issues involving the divorce process. Unless each party agrees to an irreconcilable differences, Puerto Rico sees cases in three different stages, divorce, division of assets or "División de la Sociedad de Bienes Gananciales" and if minors are involved, the child custody and child support stage. Many people don't realize that after one year Puerto Rico es the only place, there are some exceptions, where you can file for the divorce. If you have minor children, the court needs to grant permission for the kids to leave the island. Child custody cases can take up to a year or more so know the relocation plans have stalled. There are many factors that need to be accounted for, in the majority of the cases there needs to be a home study done and an investigation by a Puerto Rico social worker. This social worker will give it's recomendation to the court, where the judge can either accept or reject the report. In Puerto Rico children are entitled to recieve child support until the age of 21, then under special circunstances they can continue receiving support until age 25. So a child support determintion in Puerto Rico can mean a lot of money for each party.
When dealing with a divorce and Act 20 and Act 22, the division of assets becomes very contentious. The court will divide all the assets by a decree but how will it be enforce in other jurisdictions. What happens if the divorce includes a corporation, then the Puerto Rico judge will have to determine and split the shares of the company in half. The normal course of action in Puerto Rico is split everything 50/50 even if the assets are in one of the spouses names. Everything purchased or gained during the marriage is considered to be marital, if non-marital it has to be proven as such. If the Act 20 company is involved in the division, then how is the divorce going to affect the status going forward. Was the divorcing spouse being counted on as part of the employee requirements under Act 20? Those are all important factors to consider when filing for divorce in Puerto Rico and Act 20 or Act 22.
That is why it is so important to have a Puerto Rico Divorce lawyer who can properly address all the issues involved with Act 20 and Act 22. Please contact our Puerto Rico Divorce attorneys to help you in your case.