Matrimonial property law regulates the property relations of spouses. Questions of matrimonial property law arise on the one hand around the marriage, namely when the future or newly married spouses ask themselves whether they would like to conclude a matrimonial property regime that deviates from the statutory matrimonial property regime. On the other hand, matrimonial property law becomes relevant when a marriage is dissolved through divorce.

But what matrimonial property regimes are there in Germany?

German civil law recognizes four matrimonial property regimes:

• Matrimonial property regime of community of accrued gains;

• Separation of property;

• Community of property;

• Franco-German elective property status.

The last two matrimonial property regimes of community of property and the Franco-German elective matrimonial property regime are not covered below, as they rarely occur in practice.

The statutory matrimonial property regime of the community of accrued gains

If a marriage was entered into after the Equal Rights Act came into force on July 1, 1958 and the spouses have not concluded a marriage contract, they automatically live in the statutory matrimonial property regime of community of accrued gains, Section 1363 (1) BGB.

However, do not let the term "community of accrued gains" mislead you into thinking that there is a joint estate in this statutory matrimonial property regime. The spouses' assets remain separate during the marriage in accordance with Section 1363 (2) BGB and each spouse remains the sole owner of their assets, both with regard to assets existing before the marriage and assets acquired after the marriage. Each spouse is also only liable for his or her own liabilities incurred before or during the marriage.

Only if the matrimonial property regime of the community of accrued gains is terminated does compensation take place in the form of a claim under the law of obligations for payment of a compensation amount, Section 1378 (1) BGB. It is aimed at half of the amount by which the gain of one spouse exceeds that of the other. The gain of each spouse is calculated from the difference between the initial and final assets, Section 1373 BGB. It would therefore be more accurate to describe the community of accrued gains as "separation of property with equalization of accrued gains on termination of the marriage".

It is important to note here that case law permits numerous modifications to the community of accrued gains (the "modified community of accrued gains"). This means that you can remain in the community of accrued gains - and benefit from its tax advantages - while arrangements deviating from the community of accrued gains are made.

The separation of property

The matrimonial property regime of separation of property only arises on the basis of an express agreement in the marriage contract, Section 1408 BGB. Pursuant to Section 1414 of the German Civil Code (BGB), the separation of property already applies if the spouses expressly exclude or revoke the statutory matrimonial property regime or exclude the equalization of accrued gains or revoke the community of property by means of a marriage contract.

In contrast to the statutory matrimonial property regime of community of accrued gains, the spouses are treated in terms of property law like unmarried people with two separate estates. The spouses therefore do not participate in the increase in assets that the other achieves during the marriage and there is no equalization when the marriage ends. Each spouse therefore manages his or her assets alone and can dispose of them without restriction, even without the consent of the other spouse, so that the restrictions on disposal under Sections 1365 and 1369 BGB do not apply here.

Modified community of accrued gains

If certain assets are not to be included in the accrued gains or the equalization of accrued gains is to be excluded in the event of divorce, the modified community of accrued gains is the matrimonial property regime of choice 

This is because the legal model of the community of accrued gains is still the so-called "one-earner marriage", in which only one spouse is employed while the other takes care of the household and children. However, this often no longer corresponds to reality. It is not uncommon for spouses to have a "dual-earner marriage", with the result that the community of accrued gains model can lead to injustices.

There are countless structuring options here. For example, a potential equalization of accrued gains can be completely excluded. In terms of matrimonial property law, this means that there is no equalization of assets between the spouses when the matrimonial property regime is terminated by divorce or other dissolution. The consequence under inheritance law is that the spouses' statutory inheritance rights are not increased in accordance with Section 1371 (1) BGB and the spouse's compulsory portion is also lower. However, the equalization of gains can also only be excluded during the lifetime of the spouse, be conditional or limited in time or against compensation of the less earning or wealthier spouse. It is also possible to make arrangements for pension equalization and for post-marital and child maintenance.

What advantages does the modified community of accrued gains offer?

• Tax advantages of accrued gains: Accrued gains are not subject to taxation. This applies both to the termination of the matrimonial property regime through divorce and the death of a spouse. Section 5 ErbStG grants the surviving spouse a "fictitious equalization of gains", which is why the amount that could have been claimed as equalization of gains in accordance with Section 1378 BGB upon termination of the matrimonial property regime between living persons is deducted from the assets acquired as a result of the death. This means that the surviving spouse can deduct the so-called fictitious gain from the inheritance received. Only the remainder may be subject to taxation. In addition, within the framework of the community of accrued gains, use can be made of the marital property regime swing. This allows one spouse to transfer assets to the other spouse tax-free by switching to the matrimonial property regime of separation of property, which triggers the equalization of gains to the spouses.

• Protection of substantial assets: Assets that were already part of the spouses' assets when the marriage was entered into are generally not included in the gain. This does not apply to the increase in value of these assets. Real estate, companies and inheritances in particular often increase in value. For example, if a spouse has a condominium that was worth 100,000.00 euros at the time of the marriage and is worth 150,000.00 euros at the time of the divorce, this increase in value is included in the equalization of gains in the amount of 50,000.00 euros. This can be excluded at the time of marriage through the modified community of accrued gains. It can also make sense to exclude companies from the equalization of accrued gains in order to avoid having to make a high payment in the event of divorce due to any increase in the value of the company, which could lead to financial difficulties for the company.

But how do I agree on a different statutory matrimonial property regime?

If you wish to deviate from the statutory matrimonial property regime of community of accrued gains, a marriage contract is required. According to § 1410 BGB, such a contract must be drawn up in the simultaneous presence of both parties and recorded by a notary.

The following points can sometimes be regulated in a marriage contract:

• The applicable matrimonial property law:

• Regulations on pension equalization;

• Property settlement in the event of future separation (matrimonial home, business, real estate, distribution of household items);

• Regulations on post-marital maintenance;

• Rules on access and custody of minor children.

Our services:

Questions about property rights. You may want to get married or divorced soon, but would like to weigh up the legal consequences for yourself beforehand. If so, we will be happy to advise you on all matrimonial property law issues and explain the various options available to you.

Or are you thinking about a prenuptial agreement? Even if (future) spouses may have the same ideas about a "fair" agreement, it is always conceivable that the arrangements made are unconsciously incomplete and not everything has been thought of or one of the spouses is less business-minded.

When preparing a marriage contract, the spouses should therefore seek individual advice from different lawyers so that they are fully aware of their legal position and all legal consequences. This is the only way to ensure that the spouses are on an equal footing.

We will be happy to advise you. Whether you already have specific ideas or would like some advice in advance is irrelevant. Just get in touch with us.