Disadvantages of separate estate
This reveals that the ideas held by the parties involved often differ greatly from the actual legal situation because the term “community of accrued gains” (Zugewinngemeinschaft) is somewhat misleading. This is because even in the matrimonial property regime of the community of accrued gains the respective assets remain strictly separated and in the event of a divorce both parties generally retain the assets that they brought into the marriage. In addition, no spouse is liable for the debts of the other based on this matrimonial property regime. Joint liability for the debts of the other spouse only comes into consideration when a spouse makes a direct undertaking, e.g., by providing a surety. However, this liability is independent of the matrimonial property regime and only arises due to the additional signature. During the marriage, the community of accrued gains is also a separate estate. Yet the spouse that earns more during the marriage does have to pay the other an equal distribution of surplus. The underlying idea is that there exists an equitable, symbiotic, economic community between the spouses even if they perform different functions. In particular, the spouse who takes care of the home and family while the partner goes out to work should not come away empty-handed in the event of a divorce. The difference between the two matrimonial property regimes is that there are no compensation payments for the separate estate if the marriage comes to an end.
There are other reasons too why the separate estate solution is often not to be recommended. In most cases, it disadvantages the spouse as it increases the share of the inheritance and/or the compulsory portion rights of children and other relatives. It also incurs disadvantages when it comes to inheritance tax. Should the equal distribution of surplus be ruled out for reasons that are either event-related (in case of divorce) or subject-related (for certain assets owned by the married couple), there is the option of a so-called “modified community of accrued gains” agreement. For example, it can be specified that in the event of a death of a spouse the more favorable community of accrued gains in terms of tax and compulsory portion rights shall apply, but in the event of a divorce no equal distribution of surplus shall be undertaken, or that real-estate property or companies shall be left out of the calculation. This avoids the disadvantages of the separate estate and retains the advantages of the community of accrued gains, especially when it comes to taxation.
The important thing to remember is that agreements pertaining to the matrimonial property regime are only possible in notarized marriage contracts. A marriage contract can be concluded at any time - both before the marriage ceremony as well as afterwards.
Dr. Herbert Buschkühle is an attorney-at-law/tax advisor/notary public/ specialist attorney for tax law/ specialist attorney for inheritance law at PKF WMS Dr. Buschkühle PartG mbB Rechtsanwälte Steuerberater, a co-operation partner of PKF WMS Bruns-Coppenrath & Partner mbB Wirtschaftsprüfungsgesellschaft Steuerberater Rechtsanwälte (member company of the PKF network).