Prenups and Divorce in France

17

Prenuptial Agreements and Divorce in France
QUESTION:
I am American, and would like to buy a house in France with my French husband. At the moment we are thinking of choosing French law to govern our marriage, in which case we have to declare a matrimonial regime.

I am concerned about the outcome of a possible divorce and I would like to know the differences, in case of divorce, between séparation des biens (i.e., total separation) versus communauté réduite aux acquets (i.e., partial community) versus communauté universelle (i.e., Californian community property/universal community). My husband makes a lot more than I do, and we have several sources of income. Making sure my name is mentioned on all assets can be complicated and tedious and I think it is likely I might not pay sufficient attention to this. So I would appreciate your comments regarding what can be done to protect me in case of divorce.

ANSWER:

The matrimonial regime is often the subject of a major misconception, and people do not understand what it does. People almost always relate the prenuptial agreement with divorce, and therefore want the prenuptial agreement to address the consequences of divorce. While it is true that a well-written prenuptial agreement facilitates the splitting of assets and debts, among other things, in case of divorce, it is not really meant to do that. This legal document essentially just addresses one key issue: “WHO OWNS WHAT & WHY?”

When the couple expresses no preference, then the law determines by default the aspects of the marriage having to do with the couple’s assets and debts. This is the legal reality in most countries.

Because the prenuptial agreement deals with this issue, it has a crucial effect on the consequences of divorce. By determining how assets and liabilities are split between the spouses during the marriage, it also facilitates their division in a divorce. It has the same effect on the definition of the estate or of the ability to give assets as a generation-skipping gift.

The choice of the marital regime depends on the nature of the work done by the spouses as well as their personal dynamic. One choice does not fit all, by any means.

That being said, for the vast majority of people, a community regime makes more sense – either partial community, known in France as communauté réduite aux acquets, or universal community such as that familiar in California as well as the Germanic and Scandinavian countries. This is true because most people do not need the extra protection that comes with the separation regime, and have a daily life of significant sharing of emotions, decisions, and finally assets and liabilities.

Let me try to describe each of the three types of regime so that the mechanics of each is clear.

Total separation – séparation des biens:

I call this the “two bag” regime. Under this system, wedding creates no joint ownership at all. Everything is owned according to its status when it was purchased. Any purchase jointly made or liability jointly incurred is divided between the two bags.

The main advantage and security that comes with a total separation regime is that when one spouse runs a business and therefore can incur huge liability, the other spouse can be declared owner of all major family assets – house, savings, and so on – in such a way that if there is a financial disaster, the family is protected.

The main risk lies in the financial imbalance intrinsic to this type of contract. If the couple does not make sufficient effort to correct this imbalance, the wealth will be unevenly divided throughout the marriage. In a traditional setting, the husband needs to give the wife money to cover daily expenses and to balance the stream of income more evenly. But this does not happen as often as it should with this regime.

Partial French community – communauté réduite aux acquêts:

I call it the “three bag” regime. The wedding creates joint ownership of all assets and liabilities thenceforth acquired or incurred. Each spouse keeps separate ownership of the things owned or acquired before the wedding, plus any inheritance coming after the wedding (because in France you generally inherit from blood relatives so the right exists from birth).

The main advantage is that, since the community is created by the wedding, the natural consequence is that as time passes the common assets and debts grow, thus automatically protecting the financially weaker spouse.

The main risk with this regime is that unless the spouses scrupulously document their use of the personal money and other assets that they had before the wedding, there is a natural tendency for the separate assets to blend with the common assets and debts, and before you know it only the few things that had a title or proof of origin stay personal.

Universal community – communauté universelle:

This is the “one bag” regime, in which the wedding creates joint ownership of everything each spouse owns. To define the assets and the liabilities of one spouse, you take 50% of what is in the bag.

The main advantage is that it greatly simplifies issues related to ownership, gifts and debts.

The main risk is that it can considerably reduce the assets of the wealthier spouse, especially when the marriage lasts only a few years. There have been movies made about this, since California law requires this kind of regime and the movie industry is still mainly based there, which implies a lot of very wealthy people and the prenuptial reflex when one gets married in that state.

Now, no prenuptial agreement or marital regime will ever address the issue of divorce properly, since by its very nature it is not about settling in advance disputes arising from a legal separation.

Given the way you have presented your situation, you would be much better off addressing this issue in stages.

1. What regime do you choose and why?

2. The best reason I can think of for choosing universal community is if a couple runs a business together and shares everything. The protection aspect does not interest them but the idea of having maximum leverage with their personal assets is essential. This analysis is often totally overlooked and I like the idea that couples can address such a difficult issue before the wedding.

3.  What personal modifications to a standard contract would you want, for instance, about the contribution of the spouses to the finances of the household, the choice of the family home, and so on? It is not always necessary to significantly alter the template; the main thing is that if the couple comes up with some ideas for specific provisions in the contract, it means they have discussed the issues, which is an excellent thing.

4.  What guidelines would you need to follow in case of divorce regarding:

a) the guardianship and the education of the children, including either joint custody or visitation rights

b) the use and the ownership of the family home

c) alimony and child support

Here, on the contrary, I have strong objections to writing things so they are too specific. In theory, the idea is excellent and would avoid many disputes. But as it happens, this set-up does not really work with international marriages, since the consequences of divorce (and the settlement of estates) differ greatly from one country to the next. This means the prenuptial agreement could make excellent provisions for one country that will be declared null and void by lawyers or judges in another country. And yet, if the provisions are so vague that they fit all possible legal systems, they are probably not worth writing. This issue can quickly become a huge can of worms with international marriages.

Therefore, I advise you to stick with the fundamental purpose of the prenuptial agreement and choose the regime that fits your couple best. Then, once this is done, if you wish to add things to it, get the help of an excellent lawyer and put in the provisions you believe will help you as a couple and as a family, including dealing with a possible divorce.

 

17 comments

  1. Avatar
    N Burke

    We were married in massachusetts in October 2011. I was a Mass resident, my husband lived in New Jersey. We maintained separate residences after our marriage until we moved to france in december 2011. We then jointly bought a house in france and are fiscal residents. We have nothing in the USA., including any children from this or any other marriage. We are in our late 60’s. I want to buy another house in France on my own, with my own money from before we were married, to live there away from my husband. My husband has no problem with this and is willing to sign an affadavit stating that he has no interest in my purchase whatsoever. The purchase is being held up because the notaire cannot figure out what marriage regime we fall under, whether US or French. She has contacted Cridon but they have not responded. Is there some other authority that can determine the marriage regime and move this forward?

    Reply
  2. Avatar
    Patricia

    Bonjour Monsieur,
    I am an American gathering every bit of information before I marry my French boyfriend here in France. Your post was incredibly informative and needless to say, I’m in need of some advice. After looking at the 3 different types of prenuptial agreement, I’m assuming Partial French community – communauté réduite aux acquêts works best for my situation. We don’t plan on acquiring any business, nor own significant assets. He does earn more than I do, and aforementioned there is always the risk of financial imbalance. If ever we make a big joint purchase, it’s always clear to whom it really belongs. Therefore, I’m torn between between this regime or the Total separation. Your response will allow me to be one step closer to our goal getting married and I greatly appreciate it. Thank you and have a great day.

    Reply
  3. Avatar
    bill

    I hope this question is not too naive. I have a simple question: If is prenuptial agreement is signed in France by both parties (i.e., French citizen & U.S citizen) will. that agreement be admisable in a divorce case in Boston Massachusetts? (20 year marriage)

    Reply
    • Avatar
      taquet

      I believe that there is some misunderstanding regarding what the prenuptial agreement is. This document is by no means related to a divorce. It is just component used by the court to rule in numerous different situations.
      This contract has just one purpose, defining
      in the couple
      WHO OWNS AND OWES WHAT AND WHY

      So this means that the couple chooses what is the rule in their couple.
      1 – total separation means that there is never an assumption of common ownership and it must be documented every time you want it, by both of you signing for something like buying a house, a car and so on.
      2 – universal community means that everything is owned by both of you and this means one signs and both owe or own.
      3 – partial community what is yours personally BEFORE the wedding stays yours, what you earn and owe after the wedding is community property both own and owe.

      So this document stating one of those 3 rules can be used in another country and it works really well between France and the USA.
      Now Let’s answer your answer my way.
      YOU
      I hope this question is not too naive. I have a simple question: If is prenuptial agreement is signed in France by both parties (i.e., French citizen & U.S citizen) will. that agreement be admissible in a divorce case in Boston Massachusetts? (20 year marriage)
      ME
      So YES, a contract signed in France with a notaire which makes it valid in France is also valid in Boston Massachusetts. Now the HUGE difference is that the rules regulated the divorce will be the ones of Boston Massachusetts. So this means that almost always American judges disregard the prenuptial agreement as it only deals with ownership, and they need to rule regarding liability and compensation. The French considers that there are very few grounds to ask for this.
      So you need to very carefully follow the arguments of the court.
      I know this situation very well because I had a Boston Massachusetts prenuptial agreement and a divorce happening in France and the 2 law firms fought what was the law in Boston Massachusetts one was quoting the prenup and the other one the divorce regulation of Boston Massachusetts. Only the prenup ones needed to be used by the French courts.

      After 20 years of marriage, I am afraid that the Boston Massachusetts completely disregards the prenup. As you can see I am not a court lawyer but I work along the lawyer in those cases.

      Reply
  4. Avatar
    Craig

    I am Amrican and will marry in France with my French fiance.
    We are signing a Preunptial Agreement with two major components in mind: My Business to remain my property after the marriage –> To protet the accounts of my spouse from debt and creditors. All earnings and debt will remain with me.
    Secondly to protect our inheritance from our parents –> We both wish our inheritance to remain our own; assets to remain the property of the inheriting spouse.
    Whish Regime would best suit these provisions?
    Can the Regime be created to address ONLY these two issues?

    Reply
    • Avatar
      Jean taquet

      YOU
      I am American and will marry in France with my French fiance.
      We are signing a Prenuptial Agreement with two major components in mind: My Business to remain my property after the marriage –> To protect the accounts of my spouse from debt and creditors. All earnings and debt will remain with me.
      ME
      The reasons to sign a prenup vary a great deal. Specifically there are many reasons why a couple would sign a separation prenup. Since you are running a business, it is common sense to have such a prenup when you get married so that you protect your home and your family belongings from the business creditors.

      YOU
      Secondly to protect our inheritance from our parents –> We both wish our inheritance to remain our own; assets to remain the property of the inheriting spouse.
      Which Regime would best suit these provisions?
      ME
      This prenup does this very well as the rules of ownership are then very clear.
      Allow me to fully answer with the next question.

      YOU
      Can the Regime be created to address ONLY these two issues?
      ME
      Let’s go back to the fundamentals. A prenup which in effect is the marital regime defines only one thing but it is critical in a couple which is
      WHO OWNS WHAT & WHY?
      So you are absolutely right that the separation regime clearly and somewhat brutally states that each spouse maintains full ownership or their assets and debts. Therefore the wedding and the institution of marriage does not create communal ownership.
      Now there is a choice in the way you approach this issue.
      1 – the prenup starts with claiming separation and then lists all the topics where it does apply. The immediate consequence is that it weakens the document and complicates its use for the future.
      2 – the prenup creates a strong and universal separation with zero exception. Then and this is where it is critical to understand the 2 spouses sign together for everything that needs to be communal. So at the end the same goal is reached simply this latter solution keeps everything clean.

      Stated differently and allow m to give examples
      1 – regardless of the prenup either you or your spouse to be will go grocery shopping without thinking in terms of ownership but in terms of taste and inclination. Here everything is shared without even you thinking about it.
      2 – the appliance and the furniture in the home. One choice is to put everything in 2 names. The other choice is to purchase without thinking about it and forget who bought it. In both cases the end result is that it is communal since it is impossible to know who bought it. Even without intentionally planing it this is the most common outcome once the warranty has lapsed.
      3 – now comes the large purchases, most of the time they require a bank loan. Then here the couple adopts a specific strategy for a precise purpose. The prenup clear and clean allows to easily make decisions. Think of buying the family home exclusively in the name of spouse who is not a merchant so that no creditor can touch the home! Think of you being the guarantor of the company’s loan with the bank, and she does not sign, keeping the protection solid. Think of maybe buying the family car in 2 names, ….

      I always reach the conclusion regarding this topic by saying 2 things:
      1 – there is no perfect prenups, the prenups must be chosen according to identified needs, and the couple/family must act accordingly.
      2 – what is critical is more the coherent behaviour of the couple/family through out their life than what is in the prenup.

      Reply
  5. Avatar
    Elie

    California does not have a universal community regime. It’s close to the French default partial community regime.

    Reply
    • Avatar
      Jean taquet

      allow me to add just one thing. Even though the result of the reduced California Community Property and the French Communauté Réduite aux Acquets can be see as similar, the legal logic sustaining the 2 systems is quite different.

      Reply
  6. Avatar
    Anonymous

    Dear Sir,

    Firstly, when I try to buy your books (clicking on the red link ‘Living in France’), I get Server Not Found. I’m also trying to purchase ‘INSIDER PARIS GUIDE for Living in France but, still, Server Not Found.

    Alors, I’m looking for detailed information regarding the marriage contract ‘Separation des Biens’. I’m also looking for advice (for example a solicitor specializing in the subject).

    Do you have any information and/or legal recommendations? I see that you live in Toulous, please note that I live in central PARIS.

    Thanks for your time, I look forward to reading your book(s).

    Reply
  7. Avatar
    lavender

    Question: if married in Pennsylvania, with no specific contract, and now living in France and wanting to divorce in France, is there need to apply any law of Pennsylvania?
    Thanks!

    Reply
    • Avatar
      taquet

      Dear Ms. Lavender,

      Thank you for your message.
      I need to define a few things before answering your question which seems simple but it is not.

      There are 3 things to define.
      A Franco-American couple got married in PA and is about to divorce in France.

      Since you are living in France and I assume for a few years you have established your primary residence in France.
      1 – French law applies to your marriage and especially the obligations on each spouse towards the other

      Since you are living in France and the last home of the couple is in France as a primary residence, the de Hague treaty states that:
      2 – French law applies to your divorce procedure regardless where the spouses will be living once the procedure has been started

      Since you were married without a prenup and you have not chosen your marital regime while you were married, the rule by default applies. Therefore the de Hague treaty states that:
      3 – of all the possibilities of interpretation, where the couple have lived their 1st years of marriage. I assume that it could be France once again.

      In many ways, this is good news to you since PA has the British separation regime which would leave you with very little. The French one is community property starting the day of the wedding which should give fairly more.

      Now there are 4 different procedures to divorce in France and they have very different results and you cannot really change so this decision is critical to you.
      requête conjointe – the couple agrees on everything – the couple can have one lawyer but be careful with this – you decide how to split everything / the alimony / and the rest.

      standard – the couple agrees on a minimum of one thing to divorce – the rest of the issues are ruled by the judge.

      rupture de la vie commune – one spouse left the home for more than 2 years – the divorce can be granted against the will of the other.

      fautes – there we are talking domestic violence – physical and psychological fear, most often comes with a criminal but this is not an obligation, there is jut a need for a strong file (medical file!)

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *