A new law on matrimonial property came into force in the Netherlands on 1 January 2018. From that date onwards, unless otherwise stipulated by prenuptial agreement, you get married in limited community of property.
As a result only those assets and debts acquired during the marriage form part of the community of property, while those assets acquired by inheritance or as a gift and Pension rights as intended in the “Act on equalization of pension rights in the event of separation” and widowers’ pensions are excluded. The community of property includes assets owned jointly by the spouses prior to marriage.
The limited community property is dissolved by divorce (more specific on the actual day the divorce petition is submitted to the court) and must therefor be divided. Ruling principle being that both (former) spouses are each entitled to 50% of the assets and debts.
Were you married before 1 January 2018?
In that case, you are married in community of property if you did not have a prenuptial agreement drawn up before or during the marriage.
In this regime the principle is that all assets as already owned by (one of) the spouses at the beginning of the marriage combined with all assets acquired thereafter belong to the community property as long as the community is not dissolved.
However some assets are in fact no part of the community of property. These are assets acquired by inheritance regarding to which the deceased stipulated the intention (also called an exclusion clause) that said assets shall remain outside the community. The same principle applies to gifts in case the donor stipulated the same. Pension rights as intended in the “Act on equalization of pension rights in the event of separation” and widowers’ pensions also do not belong to the community.
In principle, all debts as entered into – both before and during the marriage – are also part of the community, regardless of which of the spouses in fact entered into said debt. An exception is posed by debts concerning the separate assets. Each of the spouses’ creditors may seek to recover their claim from the entire community.
The community property is dissolved by divorce (more specific on the actual day the divorce petition is submitted to the court) and must therefor be divided. Ruling principle being that both (former) spouses are entitled to 50% of the assets each. Said division can be established by divorce settlement agreement or by a court ruling. Should spouses both agree they may deviate from a 50/50 division and agree to different arrangements in a divorce settlement agreement. Should the divorce, or more specific the division of community properties, be contested in court, the court will as a rule hold to the equal division of property. The actual distribution of the community property can either take place by distributing the very assets or by paying a monetary compensation.
How to deviate from the (limited) community of property in case Dutch law does apply to the marriage?
To avoid unwanted consequences of marrying in (limited) community of property spouses can agree to either a pre or post nuptial agreement before a Dutch notary public excluding the universal community of property and stipulating the rules for the division of property in the event of a divorce.
A regularly used prenuptial agreement contains agreement to the fact that there will only be a partial community of property for certain goods, such as the marital home. Regarding all other assets that form no part of this partial community it is clearly stipulated that they are deemed to be privately owned by the spouse that acquired said property, whether before or during the marriage. In this case discussions that are likely to arise concern questions like what properties do or do not belong to the partial community and what to do with financial injections in a property of one spouse made by the other one? In the latter case the spouse who contributed to the others’ property shall most likely be entitled to a refund of the monies that were coming from his capital.
It is also possible to exclude all communal property by prenuptial agreement. What is most commonly seen in this kind of agreement is that there are clauses formed to arrange an annual set-off. Said clauses requiring the spouses to compensate each other at the end of each year for differences as to income and capital. A different way to establish such a compensation would be to stipulate a final off-set clause requiring the spouses to compensate each other upon the actual divorce. Regarding these off-sets one can easily imagine disagreements as to which income or property should be part of the off-set, regardless whether this is an annual or final one. Do you have any questions regarding the community of property of regarding a prenuptial agreement, please let us help you with them and feel free to contact our offices for additional information or advice.