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.
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.