One heart, two sets of assets?

When couples marry, they should talk not only about feelings but also about money.

My partner (38) and I (34) want to get married. I’ve often heard that a marriage contract is sensible, since 40 percent of marriages in Switzerland end in divorce. Do you recommend such a contract, even though we’re absolutely sure of our love? And what should we do about retirement savings and fi nances?

Carla A., Bellinzona

Dear Ms. A.,
Congratulations! Also for your sensible approach to important fi nancial aspects, despite all those butterfl ies in the stomach. Your question about a marriage contract is complex. What happens if, contrary to expectations, there’s a divorce and you don’t have such a contract?

Assets that you bring into the marriage and inherit during marriage (personal property) remain yours. And your partner’s personal property remains his. However, assets that you have generated together during your marriage will be equally shared on divorce, even if you have contributed differently to them. This principle is called “community of acquired property” and is valid as the statutory matrimonial property regime whenever no other agreement has been made.

Individual arrangements
You can set a different course in a marriage contract. You can agree to have either community property or separation of property. Under community property, all assets, including those brought into the marriage, are pooled and halved in the event of divorce. But individual assets, such as real estate, can be excluded from the community property agreement. If you make a separation of property agreement, you and your partner’s assets remain separate both before and during marriage. This makes it easier to divide the assets if the marriage breaks up.

You can improve the inheritance position of your partner by using a will. This ensures that the surviving spouse receives the maximum possible assets from the marriage. It means, for example, that the spouse cannot be forced to sell a property built during the marriage in order to pay out the inheritance of other heirs. However, the statutory portions of the estate (e.g. for children) remain protected. An exception is if the legal heirs agree to a different distribution. If there is no marriage contract or will, the deceased marriage partner’s share, as under community of acquired property, will be divided between the heirs according to the order of statutory succession.

Fifty-fi fty for retirement funds
What happens to your pension funds if you divorce? The half-share principle applies here, irrespective of any marriage contracts you have chosen. So, the pension fund assets that you have saved during your marriage will be shared. If each of you has your own retirement fund, you both have mutual entitlements. Only the difference is then shared. Retirement plan assets acquired before marriage, including interest, remain untouched. Single premium policies fi nanced from personal assets are also exempt from division. If there is disagreement between the partners, the court will decide how to split the retirement plan assets.

Whether or not you make a marriage contract is a personal decision. You can make one at any time, but it must be signed by both partners and certifi ed by a notary. So, fi rst you can enjoy the more romantic part of making your wedding plans.

Retirement fund specialist  

Nils Aggett is responsible for Pension Services and the topic of retirement planning at UBS

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