"Hope for true love, but draft a marital agreement anyway." — Avov Avolog
Marriage has existed since the first people walked the earth. Today, the word "marriage" stirs mixed feelings — some dream of it as a wonder, others picture, with dread, a boat that sooner or later capsizes on the rocks of everyday life. Indeed, a marriage can crack for any number of reasons: the birth of a child, accumulated and unresolved financial problems, or simple misunderstandings. When a couple reaches the point of divorce, they may still wish to save the marriage, but after painful events it often becomes very difficult, and not always possible, to do so. Any psychologist will tell you that ideal family relationships do not simply happen on their own. Two people who spend a great deal of time together cannot, as a rule, avoid arguments, resentment, or friction — even if they truly love each other.
As our regular readers and clients well know, one of the core practice areas of our law firm is family law. One of the family-law topics that residents and citizens of Germany find most pressing — and one they raise with their lawyers ever more often — is whether it is worth entering into a marital agreement (German: Ehevertrag).
Spouses are, in particular, interested in what it means for their financial and personal security, and in how it works in practice. Fortunately, educated, forward-thinking people have long since come to see a marital agreement not as a sign of total distrust rooted in the fear of being cheated by one's partner, but rather as a sensible precaution against possible disagreements over the financial side of married life — a pre-agreed, rational division of roles for regulating the relationship both during the marriage and if it ends. A marital agreement makes it possible not only to achieve a relatively high degree of balance between the parties' property interests during the marriage, but also to plan for a division of property, acceptable to both, should the marriage end. Such an agreement is also seen as a sensible way to protect both parties against the economic risks that arise when a marriage ends, or on old age or the death of one spouse.
As a general rule, if no marital agreement has been signed, Germany applies a statutory property regime under which premarital assets are kept separate while assets acquired during the marriage are treated as jointly owned. At divorce, jointly acquired property is subject to a proportional equalization: the spouse who has built up the larger share of capital must pay the other spouse half the difference. The main purpose of a marital agreement is for the partners to jointly and voluntarily regulate their property relations — that is, to opt out of the statutory scheme and decide for themselves what counts as joint and what counts as separate property.
From a legal standpoint, a marital agreement in Germany is a contract between people about to marry, or between spouses, that sets out their property rights and obligations during the marriage and/or in the event it ends. It should be kept in mind that such a contract regulates not personal matters but exclusively relations falling within civil law: the parties may agree on and formally record only their relations concerning property, that is, the applicable property regime, and may also exclude the equalization of pension entitlements. A marital agreement may be signed either before the marriage is registered or at any time during the marriage — including a period when the spouses, for whatever reason, are living apart and planning an eventual divorce. One signed before registration takes effect on the date of registration. Where a party to the agreement is a minor, German law, like most legal systems, requires the consent of their legal representatives.
As an example of the work our firm's family-law lawyer does, particularly in drafting marital agreements, we would like to share the following case from our practice.
A married couple — let's call them Viktor and Lyudmila (names changed) — came to us for a consultation. By the time they approached us, they had already been living apart for about two months and were planning to divorce in the near future. It mattered to them to settle their property relations, as well as the rights and obligations concerning their joint children, in a way that would be governed not by the generally applicable rules of civil law, but by the arrangements they had reached between themselves. Working with them, our firm's lawyer was able to help the couple settle the most important financial questions, give legal form to what the partners had already agreed verbally, and set out arrangements for the children's future upbringing and financial support. We describe below the key points at the center of this case, and how we translated their verbal understanding into a binding legal document.
First, one of the priorities was divorcing as soon as possible — that is, without observing Germany's minimum separation period (Trennungsjahr) of between one and three years. Since both spouses were Moldovan citizens — even though both lived permanently in Germany — a number of terms in the marital agreement could be made subject to Moldovan law instead. As Moldovan law contains no equivalent minimum-separation requirement before divorce, the marriage could be dissolved sooner, which in this case served both spouses' interests. The remaining provisions of the agreement could still be governed by German substantive law.
Second, the draft agreement set out both the permanent residence of the couple's minor children and the arrangements for the non-resident parent (Viktor, in this case) to remain involved in their upbringing. We fixed the frequency and length of Viktor's time with the children, as well as the days of the week and holiday periods when he could have them stay with him. In addition, following extended negotiations and consultations, the parties reached an agreement on child maintenance. It was important here that the maintenance amount for the minor children not fall below the figures set out in Germany's Düsseldorf Table (Düsseldorfer Tabelle). Child maintenance (Barunterhalt) is calculated from the paying parent's net income and the child's age, using the figures set out in that table. Although the Düsseldorf Table is not legally binding, the courts nonetheless use it as the primary benchmark for setting maintenance amounts. It has existed since 1962 and sets out the nationally applicable support requirements, in force at any given time, for children living both in Germany and abroad. Since 1979 it has been regularly updated by the Higher Administrative Court of Düsseldorf.
Third, with our help the clients settled other property matters that were high on their agenda, including the division of income and the repayment of loans relating to jointly owned real estate — specifically, a house outside the city and an apartment in central western Berlin. On our firm's lawyer's advice, the spouses decided to set up a civil-law partnership to receive income from the jointly owned property. They also resolved how to continue repaying a loan the couple had taken out together earlier in the marriage. This avoided disputes over income already jointly earned, avoided having to sell jointly acquired property, and fairly allocated future income from using the property to generate profit.
With our lawyer's guidance, the spouses also agreed that although the apartment where both of them had previously lived with the children would remain Lyudmila's property, upon her death it would be divided and passed on to each of her and Viktor's children in equal shares. As a result, Lyudmila alone retained ownership of the apartment for the children's continued comfortable living, while at the same time our client took on certain obligations regarding the property's future disposal, even though it was not itself divided between the spouses.
Finally, one of the most important provisions of the agreement was a waiver of the equalization of pension entitlements. Under German law, equalizing pension entitlements (Versorgungsausgleich) means that the spouse with the larger pension entitlement effectively shares it with the spouse who has the smaller one — that is, whichever spouse accrued more pension entitlements during the marriage must "share" them with the other. In this case, the clients agreed to opt out of that arrangement and instead each keep the pension entitlements they had individually "earned."
As a result, with the help of our firm's lawyer supporting the divorcing couple, they were able to: resolve the divorce within roughly two months, instead of the usual one and a half to two years, by applying Moldovan law — which contains no minimum-separation requirement — to that particular aspect of the marital agreement; contractually settle matters relating to the future upbringing and financial support of their minor children; reach agreement on the current questions surrounding the division of jointly acquired property, including property remaining jointly owned; decide how to continue meeting jointly assumed loan obligations and other existing debts; fix the terms under which the wife and children would continue living in the apartment acquired during the marriage and owned by Lyudmila; and, via the marital agreement, opt out of the standard statutory division of pension entitlements based on each spouse's actual income and pension contributions.
In short, turning to our law firm in good time allowed this couple to simplify what is normally a lengthy and complex divorce process in Germany, and to settle the key issues facing spouses who have decided to separate and formalize the end of their marriage. Our team wishes every family a long and happy life together in peace and harmony — but, as the saying goes, life is not a walk in the park. If you need help drafting a marital agreement before or during a marriage, or your relationship has reached the point of divorce, we invite you to get in touch with our law firm, where you will always receive highly qualified, professional help with every legal aspect of your case.
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