Unless the prospective spouses have agreed otherwise in writing in advance (by means of a prenuptial agreement), they enter into the statutory matrimonial property regime upon contracting marriage. Law recognizes several matrimonial property regimes, and prospective spouses may choose the regime under which they wish to manage their finances during marriage. The statutory matrimonial property regime is one of these property regimes. Unlike other regimes, it applies directly by operation of law.
Statutory matrimonial property regimes vary across states, not only in their terminology but also in their substantive content. In this article, we will focus on comparing the statutory matrimonial property regimes in the Czech Republic and Germany.
I. Czech Republic
The statutory matrimonial property regime in the Czech Republic is based on the institute of community property of spouses (so called společné jmění manželů). This arises upon marriage at the earliest and encompasses both assets and liabilities. Subject to exceptions provided by law, community property includes everything acquired by one of the spouses or by both spouses jointly during the marriage. These statutory exceptions include, for example, property acquired by one spouse by gift, inheritance, or bequest, property serving the personal needs of a spouse, or property acquired through legal transactions relating to that spouse’s exclusive property. Items owned by either spouse prior to entering into marriage do not form part of the community property. Conversely, profits generated by such property do form part of it. Community property also encompasses debts (liabilities), generally comprising all debts assumed during the course of the marriage.
Entering into marriage under Czech law has extensive consequences for spouses from a property perspective, which many prospective spouses may not always realize. Spouses acquire into their exclusive ownership only a narrow, statutorily defined range of assets. All other property acquired during the marriage belongs to both spouses jointly and severally, i.e., it forms part of their community property. Property within the community property may be managed by each spouse individually in ordinary matters; however, in extra-ordinary matters, spouses must act jointly or with the consent of the other spouse. If, for instance, one spouse enters into a contract for the sale of a vehicle belonging to the community property without the consent of the other spouse, the other spouse may invoke the relative invalidity of such an act before a court.
Entering into the statutory matrimonial property regime also affects potential enforcement proceedings (execution) conducted against one of the spouses or both spouses jointly. Debts of one spouse may be satisfied not only from the community property, but in extreme cases also from the exclusive property of the other spouse.
A no less important aspect of the statutory regime is that upon the dissolution or termination of the community property (typically by divorce or the death of a spouse), the community property must be settled. Often, it is only at this point that spouses realize what actually belonged to the community property and will need to be settled. Spouses may reach an agreement regarding the settlement. If an agreement is not possible, the court will decide upon application, or a statutory presumption will apply after three years from the dissolution. As a general rule for settlement, the shares of both spouses in the property being settled should be equal. However, in court proceedings, specific circumstances, expenditure, and family conditions may be taken into account (resulting in a disparity of shares). In the event of the death of one spouse, the situation is similar. The community property is either settled by agreement between the widow/er and the heirs, or the scope of the living widow/er’s settlement share is determined by the court in accordance with statutory principles. Again, broadly speaking, the widow/er acquires one-half of the community property, and the remaining half becomes part of the estate.
The creation of community property between spouses to the statutory extent—that is, contracting marriage without agreeing on a regime other than the statutory matrimonial property regime—impacts not only the ownership of assets acquired during marriage, but also issues regarding the management of community property, the potential for enforcement actions against joint and exclusive property, and the scope of settlement.
II. Federal Republic of Germany
German statutory regulations are based on the legal regime known as Zugewinngemeinschaft (commonly translated as “community of accrued gains”). Under this regime, no joint property estate is created between the spouses, whether regarding property acquired prior to marriage or property acquired subsequently. The effects of this regime manifest only upon the termination or dissolution of the regime (again, typically by divorce or the death of a spouse), at which point each spouse has the right to a settlement of gains accumulated by the spouses during the marriage (the so called Zugewinn).
Each spouse retains ownership of their exclusive property (or co-ownership) and manages it independently; disposition of such property does not require the consent of the other spouse. The sole exception is a situation where a spouse intends to dispose of their property as a whole. Such a transaction is conditional upon the consent of the other spouse, again under the sanction of relative invalidity.
Because spouses do not share assets or liabilities under the statutory matrimonial property regime, the rules regarding debt enforcement and liability for debts are also different. A spouse is generally not liable for the debts of the other spouse. Debts assumed by one spouse, whether before or during the marriage, remain exclusively that spouse’s debts, and any enforcement actions may only be levied against their own property. The other spouse is not liable for these obligations, and their property is protected from creditors. The only exception to this rule consists of ordinary legal transactions for the daily needs of the household, which give rise to joint liability for both spouses.
Upon the termination or dissolution of the matrimonial property regime, a so-called settlement of accrued gains (Zugewinnausgleich) takes place. The rules of settlement differ depending on whether the marriage and the property regime ended due to death or for other reasons.
In the event of the termination of marriage by the death of one spouse, the settlement of accrued gains is generally resolved in a simplified manner within inheritance law. In addition to their statutory intestate share, which amounts to one-fourth in the first order of heirs, widow/er is entitled to a further one-fourth of the estate as a lump-sum settlement of accrued gains. This increase occurs regardless of whether any actual gains were realized during the marriage. Consequently, the widow/er inherits one-half of the estate from the deceased, while the other half falls to the remaining heirs. If the widow/er was not an heir of the deceased, the settlement would be governed by the rules set out below.
If the marriage and thus the matrimonial property regime is dissolved for another reason, typically by divorce, the accrued gain of each spouse is calculated. This represents the difference between the final assets of the spouse upon dissolution of the marriage and their initial assets upon entering into the marriage. The spouse who achieved the higher gain is then obliged to pay the other spouse one-half of this difference in the form of a monetary settlement payment. Ownership of individual assets remains unaffected by the divorce; property rights to individual items remain with the spouse who acquired them.
III. Comparison of Czech and German Legal Regulations
The Czech and German statutory matrimonial property regimes are fundamentally different. While Czech legislation is based on a community of property created at the moment of marriage, the German model is based on a separation of property throughout the marriage, reflecting joint financial management only at the stage of termination or dissolution of the regime.
This distinction significantly affects financial management and asset administration by the spouses. While in the Czech Republic extra-ordinary matters concerning community property require the consent of both spouses under the sanction of relative invalidity, in Germany each spouse manages their property completely independently, with restrictions applying only to fundamental dispositions of property as a whole or household items.
This differing concept is fully manifested upon the dissolution of marriage by divorce. While the Czech system requires the settlement of both assets and liabilities forming the community property, in Germany items remain in the ownership of the party who acquired them, and settlement occurs exclusively through the payment of a monetary sum equal to half of the difference in accrued gains. In the event of a spouse’s death, the widow/er in the Czech Republic is entitled by law to one-half of the community property. In Germany, the widow/er’s inheritance share is increased directly within the inheritance proceedings.
Differences are also evident in relation to debt enforcement proceedings. Czech law exposes spouses to a significantly higher risk, as the debt of one spouse may affect not only the entire community property, but under certain conditions, the exclusive property of the other spouse as well. Conversely, German law provides a high degree of protection to the other spouse’s property, as execution for the debts of one spouse cannot be levied against the property of the other, with the exception of obligations incurred in the ordinary course of meeting household needs.
Both in the Czech Republic and in Germany, spouses may agree on a matrimonial property regime other than the statutory one. In the Czech Republic, an equivalent to the German statutory regime can be agreed upon (by opting for a regime where community property arises as of the date of dissolution of the marriage), just as German law provides for a regime of community of property (so called Gütergemeinschaft).
It follows that the Czech statutory matrimonial property regime constitutes a contractual matrimonial property regime in Germany, and vice versa. Prospective spouses or married couples should therefore have an overview of how matrimonial property relations can be adjusted during marriage and choose the regime that best suits both parties. The matrimonial property regime can indeed be modified during the course of the marriage.