As of Jan. 1, 2018, the law has changed. The changes affect communities created after Jan. 1, 2018. If you married after Jan. 1, 2018, or entered into a registered partnership after Jan. 1, 2018, without making prenuptial agreements, then there is the limited community of property.
Before Jan. 1, 2018, that was the general community of property, after Jan. 1, 2018, that is the limited community of property. The word says it all: not everything becomes common, there is only a limited community of property. The limited community of property also arises if you dissolve your prenuptial agreement after January 1, 2018.
In short: all goods and debts you acquire during the marriage or registered partnership become common.
Outside the limited community of property are:
- the private goods and debts you had when you entered into the marriage/registered partnership;
- the property you have acquired or acquire during the marriage or registered partnership from inheritance (or bequest) or gift.
It seems simple, but unfortunately there are some unexpected pitfalls. Where reference is made below to marriage, this includes a registered partnership.
1. If you and your partner own a house together and the ownership ratio is not equal (e.g. 60%-40%), then after you marry in a limited community of property, the ownership ratio suddenly becomes equal.
Suppose you live together and you bought a house. Because one partner invested more money in the purchase than the other partner, you have chosen an unequal ownership ratio, say 60%-40% or 70%-30%.
If you get married without making prenuptial agreements, you would say that this remains the case.
After all, any property you had when you entered the marriage remains private and does not fall into the community. Unfortunately, this pans out differently. The law states that all property that is common falls into the community. So the day after the marriage, the property ratio has suddenly become 50%-50%.
This even applies to a 99%-1% ownership ratio. If you want to keep the original property ratio, it is necessary to make prenuptial agreements.
2. All property and debts you acquire during the marriage become common.
Suppose Joris and Marieke got married in January 2018. Joris buys a car in February 2018.
To do so, he takes out a personal loan. The car becomes common (since it is acquired during the marriage) and so does the personal loan (a debt taken out for a common good).
If your intention is to keep goods purchased during the marriage, or debts incurred during the marriage, private, it is necessary to make prenuptial agreements.
3. Debts that involve common property also become common. Own money that you have invested in a common good can be "diluted."
Suppose Joanna and Joost live together and bought a house in 2016. Each owns 50% of it. They took out a mortgage together and Janneke invested €50,000.00 in the house. Janneke has a claim against Joost of € 25,000.00 because he too should have actually invested € 25,000.00 in the house. Joost and Janneke are married after January 1, 2018. The house becomes common, the mortgage becomes common, but the debt Joost owes to Janneke also becomes common. After all, it is a debt that is a common asset.
But the claim that Janneke has on Joost of €25,000.00 is a claim that she already had before the marriage. However, this claim does not become common, but remains private.
An inequality now suddenly arises. Joost and Janneke have a joint house (50%-50%), Joost and Janneke have a joint mortgage debt (50%-50%), and Joost and Janneke have a joint debt to Janneke of € 25,000.00 (50%-50%).
In fact, Joost has a debt of € 12,500.00 to Janneke and Janneke has a debt to herself of € 12,500.00. Janneke does still have a claim on Joost of € 25,000.00, but in fact Janneke has thus gained € 12,500.00. She sees her own investment "diluted." If you want to avoid this, it is necessary to make prenuptial agreements.
4. Proof problem at end of marriage.
Suppose Leo and Lieke married without making prenuptial agreements after Jan. 1, 2018. They think the new legal system is a fine solution, so they do not arrange anything. Unfortunately, the marriage ends. Lieke maintains that she had €80,000.00 in her bank account at the time of the marriage. This bank account had €100,000.00 in it at the end of the marriage. Leo says it was much less than € 80,000.00. Unfortunately, there is no more proof, because they threw away all records older than five years and did not make an overview of the assets and debts each had at the beginning of the marriage.
The bank also says it can no longer provide any records. Lieke has a serious problem of proof at the time of divorce.
So make an overview of the assets and debts each had at the start of the marriage, even if you don't make a prenuptial agreement.
5. Goods and debts for the business become common.
Suppose Kees has his own business, not in the form of a B.V., but a sole proprietorship.
Kees is married to Ria after January 1, 2018. Because they have read that the assets and debts you have before the marriage do not become common but remain private, they do not make a prenuptial agreement, because the intention is that Kees's sole proprietorship will remain his private. After the marriage, Kees purchases an expensive computer for his own business. He takes out a personal loan for it.
What Ria and Kees overlooked is that both the computer and the personal loan do not become Kees's private property, since the property (the computer) was acquired after the marriage and becomes joint property and the debt (the personal loan) was incurred after the marriage and becomes joint property.
If they want to avoid this, then prenuptial agreements should be made.
6. The business owner or owner of shares in the company must pay reasonable compensation to the community.
Suppose you own your own business or shares in a limited liability company that you acquired before marriage.
You got married after Jan. 1, 2018, without making prenuptial agreements. This company or the shares do not fall into the community. However, the law does state that you must pay to the community a "reasonable compensation" for the knowledge, skills and labor that the spouse in question used for the benefit of the business. How high that reasonable compensation is and how it is calculated is not yet entirely clear.
Advice to all entrepreneurs or owners of shares in a B.V. whose company or shares do not fall within the community of property: make prenuptial agreements!
7. If you want the "old" community of property, it is necessary to make prenuptial agreements.
Suppose Annette has a securities portfolio worth €200,000.00. Pieter has an apartment, without a mortgage, worth € 200,000.00. Annette and Pieter are married after January 1, 2018 without making prenuptial agreements. After all, they want to share everything together and their "starting position" is the same.
When the marriage ends after seven years, the investment portfolio turns out to be worth only € 80,000.00; however, the apartment is now worth € 400,000.00.
Sharing together does not apply now. After all, both the investment portfolio and the apartment have not become common, but have remained private. Annette keeps € 80,000.00 and Pieter keeps € 400,000.00.
€ 400.000,00. Annette and Pieter, in order to be able to share everything together, should have made prenuptial agreements at the conclusion of the marriage stipulating that between them the "old" general community of property would exist. Then each would have received € 240,000.00 at the end of the marriage.
8. The exclusion clause still remains necessary.
Inheritances and gifts do not fall into the limited community of property created after January 1, 2018.
However, if you want to gift or bequeath something to someone who was married before that date and you want the gift or inheritance to not fall into the community, you will still need to make an exclusion clause. After all, the new rule only applies to the "new" communities, not the "old" ones.
The foregoing pitfalls are not exhaustive. The changes in the law may produce even more unexpected surprises.
A general advice: before you get married or enter into a registered partnership, always go to the notary and get informed about how the law change will affect you personally.
mmeeuwissen@kooijmanautar.nl
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