Separation of property and a shared house
Marriage is usually also a financial union. But if separation of property has been agreed in a marriage contract, the spouses’ assets remain separate. What does this mean if one or both partners owns property? Comparis explains.
02.08.2022
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1. What does separation of property mean under the Swiss Civil Code?
In the case of separation of property, the assets of the spouses remain largely separate from one another. This also applies in particular to assets generated during the marriage. The separation of property is governed by Article 247 of the Swiss Civil Code and forms one of three matrimonial property regimes.
In addition, there is the statutory matrimonial property regime of participation in acquired property, and community of property. Unless otherwise agreed, participation in acquired property applies. You must determine community of property or separation of property by marriage contract.
Participation in acquired property: assets brought into the marriage remain separate, while assets generated during the marriage belong jointly to both spouses.
Separation of property: assets brought into the marriage and assets generated during the marriage remain separate.
Community of property: assets brought into the marriage and assets generated during the marriage belong jointly to both spouses.
Who owns the house if you’ve agreed to keep property separate?
The home belongs solely to the spouse who brought the property into the marriage or acquired it during the marriage. The other partner is not entitled to rental income or income from the sale of the property.
However, if a married couple jointly acquires a property it is excluded from the separation of property regime. In this form of ownership, the house and the income from it belong jointly to the spouses. In addition, both partners are entered in the land register. It is important to specify in your marriage contract what happens to your home in the event of divorce.
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2. What does separation of property mean in the event of a divorce?
With the separation of property regime, if you divorce you are not entitled to the assets that your partner brought into the marriage and those they generated during it. You are also liable separately for any debts in the event of a divorce.
An exception are pension assets in second pillar schemes that you pay into during the marriage. There is no separation of property with these pension assets. Unless otherwise agreed, in the event of a divorce, both partners will each receive half of the jointly accumulated pension fund assets.
The right pension advice
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Who owns the house in the event of a divorce?
If you have the separation of property regime, in the event of divorce the home remains in the possession of the spouse who brought the property into the marriage or acquired it during the marriage. If separation of property has been agreed, the other partner is also not entitled to any assets generated by the property ownership (e.g. rental income) if a separation of goods has been determined.
3. What happens if one spouse dies?
If a spouse dies, all of the deceased person’s property becomes their estate. How much the surviving spouse receives is governed by inheritance law.
The following applies to all property regimes: if there is no will, under the law spouses are entitled to half of the estate. By means of a will, spouses can increase the estate share before their death or reduce it to the compulsory share. The compulsory portion is a quarter of the estate.
Who owns the house if one spouse dies?
The deceased’s home and the profits earned from it are part of the deceased’s estate. Here, too, the following applies: in the absence of a will, the surviving partner inherits at least half of the estate. With a will, the share can be reduced to the compulsory share, which is a quarter.
4. How does separation of property affect tax?
Swiss tax law provides for married couples to be taxed together, whatever their matrimonial property regime. Thus, they are jointly liable for tax debts even in the case of separation of property. If a married couple lives separately, they may be taxed separately regardless of the matrimonial property regime.
Who pays tax on the house?
If one of the spouses owns property, the couple must usually expect to pay more income and wealth taxes. One reason for this is the imputed rental value.
The partner without property is therefore at a disadvantage: they do not make a profit from the property, but must still pay tax on it along with their spouse. If the spouses live separately and are therefore taxed separately, this disadvantage does not apply.
5. What else should I be aware of?
When concluding a marriage contract with separation of property, there are other points you should consider.
Married couples may at any time during the marriage jointly determine, amend or dissolve a marriage contract with separation of property. Contract conclusion and amendments must be certified by a notary.
The court may order the separation of property if one spouse is in considerable debt. The regime applies automatically by law if one spouse is declared bankrupt. It also comes into force, for example, if one of the spouses becomes incapacitated.
No, not necessarily. With a marriage contract, spouses can also apply the separation of property to individual, selected assets.
In principle, you are not liable for the debts of your partner. However, if your partner is responsible for meeting the ongoing needs of the family while living together, you are jointly and severally liable. This applies, for example, to expenditure on clothing, food or health insurance premiums.
Yes, that is true in most cases. In the absence of a marriage contract, a company that you build up during the marriage forms part of your community property. With the separation of property regime, the company’s continued operation is also guaranteed in the event of divorce.
This depends on your situation. If a divorce occurs after more than 10 years of marriage and your ex-partner cannot fully cover their own living expenses, you must pay maintenance if you are financially able to do so.
6. Summary: does a marriage contract with separation of property make sense?
There is no universally correct answer to this question. In most cases, the better-off spouse benefits from a separation of property regime. Spouses choose separation of property to safeguard their assets and for reasons of financial independence.
It is particularly worth thinking about separation of property in the following cases:
One spouse is heavily in debt: the spouse who is not in debt secures their assets by keeping their property separate.
One spouse runs a company or business: by choosing separation of property, they can maintain the independence of the company.
The financial situation of the spouses is very different: separation of property maintains the financial status quo.
Check the assets and income situation of both partners before getting married and discuss your options with experts if necessary.
This article was first published on 05.08.2019
