• In the case of shares, ETF, cryptos & Co., the accrual regulation comes into force without a marriage contract
• In the event of a court claim, the gains are shared – each spouse receives half
• A marriage contract provides a remedy and regulates the financial situation
Thousands of marriages end in divorce in Germany every year. According to the Federal Statistical Office, 142,800 divorces were carried out by court order in 2021 alone. This raises the question for investors as to what happens to their investment products, from individual stocks to fund units and cryptocurrencies in the event of a divorce.
Equalization of benefits vs. equalization of gains
The widespread assumption that the assets invested during the marriage are always divided by two in the event of a divorce and that each of the newly divorced spouses receives half of it is incorrect. As lawyer Niklas Clamann emphasizes as a guest author on Petra Wolff’s financial blog, a distinction must be made between pension equalization and gain equalization. The pension equalization comes into force, among other things, in the pension insurance system. If a marriage lasted three years, the family court splits the amounts paid into the pension insurance in half. Each spouse then pays half of the contributions to the pension insurance to the former spouse.
While the equalization of pensions is ordered by the family court in the event of a divorce from any marriage in which no marriage contract has been concluded beforehand, the equalization of accrued gains only occurs if it is requested by a spouse in court. Such an equalization of gains procedure provides for equalizing the gains – i.e. the assets gained by both spouses at the end of the marriage. The procedure examines in detail the respective financial circumstances at the beginning of the marriage and compares them with the financial circumstances at the end of the marriage (i.e. on the date the application for divorce was served on the other spouse).
Shares, ETFs, cryptocurrencies & Co. fall under the gain category
Many different asset classes fall into the category of gains: Cash, bank balances, real estate, cars, life insurance, lottery winnings, luxury goods, company shares, funds, or even Bitcoin, Ether & Co. Any increase in value that occurs during the marriage on the stock exchanges and on The crypto market thus also falls into the category of gains. If an equalization of gains is requested by a spouse, these gains must be divided. Incidentally, the same applies to the increase in value of real estate. This regulation is intended to take into account the assumption that both spouses contribute equally to the increase in the property of the marriage community.
If the gain of one spouse exceeds the gain of the other spouse, a compensatory payment will be made. In this case, the spouse’s gain is shared. The one with the higher increase in value must pay a sum to the spouse with a lower increase in value. All in all, both spouses have achieved an increase in assets of the same amount after equalizing gains. If one of the spouses cannot comply with the payment of the accrued gain due to a lack of liquid funds, then he must sell assets. In particularly drastic cases, enforcement can even be enforced by the other spouse through court proceedings.
If the partners have built up a joint deposit during their marriage, both are entitled to half of the deposit. They can either transfer the joint custody account to two individual custody accounts or sell the custody account and have the proceeds paid out.
sample calculation
The fact that the gain should not be confused with the total value of the capital investments must be taken into account. The following example illustrates the difference: Let’s assume that spouse A owns shares worth 10,000 euros at the time of the marriage. After three years of marriage, the deposit has grown to 15,000 euros, so the gain in this case is 5,000 euros. Spouse B had a deposit worth 5,000 euros at the time of the marriage; at the time of the divorce, this had increased to 8,000 euros. Spouse B can therefore look forward to an increase of 3,000 euros. If an equalization of gains is requested, the difference between the two gains is calculated in the first step. In the example above, this is 2,000 euros (5,000 euros minus 3,000 euros). Half of this difference is then distributed to the spouse who contributed less gains. Consequently, spouse A pays spouse B a sum of 1,000 euros in the event of a divorce; both people thus leave the marriage with a gain of 4,000 euros. Mind you, the entire sum of the assets is not simply divided in half, which would have resulted in a payment from partner A to partner B of EUR 3,500 (both spouses would ultimately have share assets of EUR 11,500 after the divorce). Rather, only the gain, which is otherwise subject to strong fluctuations in the case of shares, is offset after the three years of marriage.
Prenuptial agreements can prevent disputes in advance
Especially if one spouse is significantly wealthier than the other, a horrendous gain compensation payment can be incurred. In the case of great financial success and a correspondingly long marriage, millions can be accumulated. Therefore, lawyer Clamann also urgently recommends the conclusion of a marriage contract. Although this has the reputation of being “unromantic”, it could be an optimal opportunity “to record joint regulations in a legally effective manner. Both spouses get along well and can make fair arrangements with mutual consent” – this is often no longer the case in the event of divorce , as Clamann points out. The equalization of gains can only be suspended in the absence of a marriage contract if both former spouses agree. In this case, both can keep their stocks, ETFs and cryptocurrencies that they invested during the marriage.
Unfortunately, such an amicable divorce is by no means a matter of course. From a legal point of view, a notarial marriage contract serves to modify or even completely exclude an equalization of gains in the event of a divorce from the outset. If the marriage contract even excludes the equalization of benefits in addition to the equalization of gains, a classic community of gains has become a complete separation of property. With this rule, in the event of divorce, each spouse keeps their own share of the gain that they have accumulated during the marriage.
A modified separation of property can also be a good alternative for married couples: Individual adjustments to the marriage contract can, for example, exclude ETF assets from the equalization of gains, while gains in other asset classes such as real estate continue to be equalized in the event of a divorce.
Editorial office finanzen.net
Image sources: Roman Motizow / Shutterstock.com, Motortion Films / Shutterstock.com