Pensions & Wealth Management

Marriage contract: a necessity or terribly unromantic?

When wedding bells ring, we like just to think of nice things: the love between two people, romance and hopefully a lifelong adventure. And the prospects for this are also favourable: The divorce rate in Switzerland is falling for the first time in over 50 years. No longer one in two but only one in three marriages now end in divorce. However, while this might be good news for those wishing to marry, a residual risk nevertheless remains, as not only a marital crisis but also a self-owned business, a case of death or a large mountain of debt can pose risk factors. Find out how marital assets are governed and in which situations a marriage contract makes sense and is to be recommended.

Assets: mine, yours, ours

The matrimonial property regime is normally automatically governed by law in the event of divorce. If no marriage contract has been concluded – which isn’t strictly necessary – the so-called participation in acquired property applies in Switzerland. In the event of divorce, each partner initially retains their personal assets. This own property can also include gifts and inheritances already belonging to the respective partner before the marriage and that were brought into the marriage. When the marriage is dissolved, the assets and acquired property that both partners have jointly accumulated during the marriage are split in half.

The jointly owned home can also become a financial risk in the event of divorce: Without a marriage contract the entire property must be split according to participation in acquired property. If one spouse wishes to take over the home, the other partner must be paid out. However, the spouse moving out remains bound to the mortgage agreement as so-called joint and several liability continues to apply after divorce. If neither of the partners wishes or is able to take over the house, the only option is to sell it. However, the premature termination of a mortgage entails financial disadvantages. 

When the law fails to meet individual interests

However, the automatic legal regulation of the matrimonial property regime according to participation in acquired property does not appeal to all married couples. In these cases the spouses are free to draw up a marriage contract governing their individual situation. This allows the separation or community of property to be agreed on different terms and special provisions to be upheld. For example, in the event of a spouse’s death and in the absence of a will or marriage contract, half of the acquired property is legally awarded to the surviving spouse. A marriage contract can stipulate the couple’s desire for the entire acquired marital property to be awarded to the surviving partner.

Community and separation of property

Those not wishing to consider their existing property as their own property in the marriage can agree a community of property. The income and assets of the two spouses are then combined to form so-called common property. In the event of divorce, each spouse is entitled to half the common property. This corresponds to more than half of the acquired property as inheritances and private assets existing prior to the marriage are also split.

By contrast, with a separation of property the acquired property continues to be treated separately during the marriage. Each partner manages his or her own assets and income and there is no joint property. However, if one of the partners incurs debts that serve the marriage relationship, both spouses assume joint and several liability regardless of the matrimonial property regime.

Particularly suitable for entrepreneurs

Those not wishing to consider their existing property as their own property in the marriage can agree a community of property. The income and assets of the two spouses are then combined to form so-called common property. In the event of divorce, each spouse is entitled to half the common property. This corresponds to more than half of the acquired property as inheritances and private assets existing prior to the marriage are also split.

By contrast, with a separation of property the acquired property continues to be treated separately during the marriage. Each partner manages his or her own assets and income and there is no joint property. However, if one of the partners incurs debts that serve the marriage relationship, both spouses assume joint and several liability regardless of the matrimonial property regime.

Your personal pensions and investment advisor

Plan your financial provision and assets in good time. Your adviser at Baloise Bank SoBa would be pleased to answer your questions and support you with all issues concerning assets and pension solutions.

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