On 28 March 2017, the Senate adopted the private member’s bill concerning the restriction of the community of matrimonial property adopted. As a general rule, when two people marry, a community of property is still established. However, the scope of that community no longer encompasses the spouses’ total assets. Naturally, it remains possible to agree on the financial arrangements between the spouses before or during the marriage in prenuptial agreement to record.
New marriages
It is not yet known exactly when the legislative amendment will come into force. The new rules will not apply to marriages that have already taken place by the time the amendment comes into force. In such cases, the current rules governing the community of property will continue to apply. If a prenuptial agreement has been drawn up, it will remain in force.
The rules governing the community of property apply in full to the registered partnership. For the sake of clarity, we will use only the term ‘marriage’ in this article.
Limited community of property
In the Netherlands, the creation of a community of property remains the general rule upon entering into marriage. At present, this community comprises the spouses’ total assets. Following the entry into force of the legislative amendment, the community of property will no longer include assets which a spouse:
- property already owned at the time of the marriage (except where the spouses hold such property jointly);
- receives from an inheritance;
- receives as a gift (donation).
All property acquired during the marriage by one of the spouses or by the spouses jointly forms part of the community of property.
Inclusion clause
At present, so-called exclusion clauses are often included in wills and deeds of gift. These clauses ensure that the inheritance or gift does not form part of the heir’s or donee’s current or future community of property (including matrimonial property). If the marriage was contracted under the new regime, an exclusion clause is not necessary. This is because, by law, the assets acquired through the inheritance or gift do not form part of the community of property. If desired, the will or deed of gift may stipulate that the inheritance or gift does form part of the community of property. This is known as an inclusion clause.
As the new rules on the community of property apply only to new marriages, exclusion clauses naturally remain relevant. Furthermore, such a clause may be necessary to keep an inheritance or gift outside the community of property of unmarried cohabitants.
Company
Under the rules outlined above, a business owned by one of the spouses may fall outside the community of property. This applies regardless of whether it is a sole trader’s business, a stake in a partnership or a general partnership, or shares in a private limited company.
The community of property shall then include reasonable compensation for the knowledge, skills and labour that a spouse has contributed to that business. This shall not apply to the extent that such compensation has already accrued to the benefit of both spouses in some other way.
Proof
If neither spouse can prove that an asset belongs to them, it is deemed to be community property. However, this presumption cannot work to the detriment of the spouses’ creditors.
Planning
The changes to the rules governing the community of property are relevant to various tax arrangements. In addition, the change has implications for your financial and estate planning. Fortunately, this does not apply to existing marriages. However, if you are planning to get married or enter into a civil partnership, it is advisable to set out (or have someone set out) the implications of the legislative change.