A divorce raises complex questions regarding the division of assets. Learn how the equalisation of accrued gains, pension equalisation, and maintenance claims can be settled with legal certainty.
When Partnership Becomes Separation
A separation or divorce is among the most profound life events. In addition to the emotional strain, far-reaching economic and legal questions must be resolved. The division of assets, maintenance, and arrangements for parental custody require careful planning and well-founded legal advice.
This article provides you with a comprehensive overview of the key aspects of the division of assets upon separation and divorce under German law. It does not replace individual legal advice but helps you understand the essential relationships and ask the right questions.
The Separation Year: Legal Foundations
Prerequisite for Divorce
Pursuant to § 1566 BGB, a marriage is deemed to have broken down if the spouses no longer maintain a conjugal community and it cannot be expected that they will restore it. As a rule, the court requires a separation year as proof of breakdown.
During the separation year, the spouses must live "separately from bed and board". This is also possible within the shared home, provided the domestic community is dissolved -- that is, separate sleeping and living areas, separate household management, and no joint housekeeping.
Important Actions During the Separation Period
The separation has immediate legal consequences:
- Tax class change: From the calendar year following the separation, joint tax assessment is no longer possible. Tax classes must be changed.
- Separation maintenance: From the point of separation, a claim to separation maintenance under § 1361 BGB may arise.
- Reference date for equalisation of accrued gains: The reference date for calculating the final assets is the date of service of the divorce petition, not the date of separation.
- Asset disposal restriction: After separation, neither spouse may dispose of their assets as a whole or squander individual assets (§ 1365, § 1375 Abs. 2 BGB).
Equalisation of Accrued Gains
The Basic Principle
The statutory matrimonial property regime in Germany is the community of accrued gains (§§ 1363 ff. BGB). Contrary to a widespread misconception, this does not mean that the spouses' assets are jointly owned. Each spouse remains the owner of their own assets. Upon divorce, only the increase in assets accrued during the marriage (accrued gains) is equalised.
The Calculation in Detail
The accrued gains of each spouse are calculated as follows:
Accrued gains = Final assets - Initial assets
- Initial assets (§ 1374 BGB): The assets a spouse held on the date of marriage. Inheritances and gifts received during the marriage are added to the initial assets. Initial assets may also be negative.
- Final assets (§ 1375 BGB): The assets on the date of service of the divorce petition. Disloyal reductions in assets (squandering, gifts to third parties intended to disadvantage the other spouse) are added to the final assets.
The spouse with the lower accrued gains has a claim for equalisation in the amount of half the difference between the two accrued gains.
Example Calculation
| Spouse A | Spouse B | |
|---|---|---|
| Initial assets | 50,000 euros | 20,000 euros |
| Final assets | 250,000 euros | 80,000 euros |
| Accrued gains | 200,000 euros | 60,000 euros |
Difference in accrued gains: 200,000 - 60,000 = 140,000 euros. Equalisation claim of B against A: 140,000 / 2 = 70,000 euros.
Valuation Issues
The valuation of individual assets is frequently the most contentious point:
- Real property: The market value must be determined by an expert valuation. The costs can be substantial but are worthwhile to avoid later disputes.
- Company participations: The valuation of GmbH shares, partnership interests, or sole proprietorships requires business expertise. Common methods include the capitalised earnings method and the simplified capitalised earnings method.
- Life insurance and capital investments: The relevant value is the surrender value or market value on the reference date.
Pension Equalisation: Sharing Pension Entitlements
The Principle of Equal Division
Pension equalisation (§§ 1-54 VersAusglG) governs the division of pension entitlements acquired during the marriage. Both spouses should receive equally high pension entitlements from the period of the marriage, regardless of the division of labour during the marriage.
Covered Pensions
Pension equalisation covers all entitlements acquired during the marriage:
- Statutory pension insurance: Earnings points at the German Pension Insurance
- Occupational pensions: Direct commitments, pension funds, pension trusts, direct insurance
- Private retirement provision: Riester pension, Rürup pension, private pension insurance
- Professional pension schemes: Pension funds of the liberal professions (lawyers, doctors, tax advisers)
- Civil service pensions: Pension entitlements
Internal and External Division
The Pension Equalisation Act distinguishes between:
- Internal division (standard case): The entitled spouse receives their own entitlements with the pension provider of the obligated spouse.
- External division: The entitlements are transferred to a pension provider chosen by the entitled spouse. This is possible in certain de minimis cases or at the request of the pension provider.
Calculating Maintenance Claims Correctly
Separation Maintenance vs. Post-marital Maintenance
German maintenance law distinguishes between separation maintenance (§ 1361 BGB) during the separation period and post-marital maintenance (§§ 1569 ff. BGB) after the divorce becomes final.
While separation maintenance applies a more generous standard and no obligation to seek employment exists, post-marital maintenance is subject to stricter requirements:
- Childcare maintenance (§ 1570 BGB): When caring for joint children, at least until the youngest child reaches the age of three
- Old-age maintenance (§ 1571 BGB): When employment can no longer be expected due to age
- Illness maintenance (§ 1572 BGB): In the event of illness or infirmity
- Unemployment maintenance (§ 1573 BGB): In the event of involuntary unemployment
- Top-up maintenance (§ 1573 Abs. 2 BGB): When own income does not correspond to the marital standard of living
Calculation According to the Düsseldorf Table
Maintenance calculation follows the guidelines of the Higher Regional Courts and the Düsseldorf Table. The relevant basis is the adjusted net income of both spouses. Employment-related expenses and priority maintenance obligations are deducted from the obligor's income. The obligor retains the so-called self-support threshold.
Protecting Business Assets
Special Risks for Entrepreneurs
For owner-managers and self-employed persons, divorce carries particular risks. The value of the business is included in the equalisation of accrued gains. If the equalisation claim cannot be met from private assets, the worst case scenario is the forced sale of company shares.
Protective Mechanisms
- Prenuptial agreement: The most effective protection is a prenuptial agreement that modifies the equalisation of accrued gains or wholly or partially excludes business assets. Such an agreement is also possible after the marriage has been entered into (freedom of prenuptial agreement under § 1408 BGB).
- Separation of property vs. modified community of accrued gains: Complete separation of property has inheritance tax disadvantages. A modified community of accrued gains that excludes business assets but otherwise maintains the equalisation is frequently preferable.
- Provisions in the articles of association: Departure clauses in articles of association can prevent a spouse from indirectly becoming a shareholder through the equalisation of accrued gains.
The Role of the Notary in Separation Agreements
Separation and Divorce Settlement Agreement
An amicable settlement of all divorce consequences in a notarised agreement is, as a rule, the best solution both financially and emotionally. Such an agreement may govern:
- Equalisation of accrued gains and division of assets
- Maintenance waiver or agreement
- Transfer of real property
- Pension equalisation arrangements
- Access rights and parental custody
- Division of household goods and vehicles
Notarisation is mandatory for agreements concerning real property, maintenance waivers, and modifications to pension equalisation (§ 1585c BGB, § 7 VersAusglG).
Tax Aspects of the Division of Assets
Asset Transfers Between Spouses
Asset transfers in the context of the equalisation of accrued gains are generally exempt from real estate transfer tax (§ 3 Nr. 5 GrEStG), provided they are connected with the division of assets. The equalisation of accrued gains also remains exempt from gift tax (§ 5 ErbStG).
However, please note:
- Speculation tax: Transferring a rented property in the course of the divorce may constitute a taxable disposal under § 23 EStG if the ten-year holding period has not yet elapsed.
- Tax class change: Joint tax assessment ceases from the calendar year following the separation. Plan for the tax implications in good time.
- Limited tax deduction for maintenance payments: Maintenance payments can be deducted as special expenses up to 13,805 euros under the limited Realsplitting provisions (§ 10 Abs. 1a EStG). The recipient must, however, declare the payments as taxable income.
Mediation as an Alternative
Finding Amicable Solutions
Court proceedings are time-consuming, expensive, and emotionally burdensome. Mediation offers a structured alternative in which the spouses, with the support of a neutral mediator, work out a solution under their own responsibility.
Advantages of mediation:
- Significantly lower costs than contentious court proceedings
- Faster results, as there is no need to wait for court dates
- Greater satisfaction on both sides, as the solution is developed jointly
- Better foundation for future communication, particularly where joint children are involved
Limitations of Mediation
Mediation requires both parties to be willing to cooperate constructively. In cases of significant power imbalances, domestic violence, or where one spouse is concealing assets, mediation is not suitable. The mediated agreement should also subsequently be reviewed by independent lawyers.
Custody and Access Rights at a Glance
Joint Parental Custody as the Default
Joint parental custody continues to apply after separation. Sole custody is only transferred for serious reasons (§ 1671 BGB). In day-to-day matters, the parent with whom the child lives decides (§ 1687 BGB). Major decisions such as school choice, medical procedures, or changes of residence require the consent of both parents.
Access Rights
Each parent has the right and the duty to maintain contact with the child (§ 1684 BGB). Access rights serve the child's welfare and should be agreed amicably. Widely used models include the residence model, the alternating residence model, and the nest model.
Conclusion: Act Early, Seek Professional Guidance
A separation requires not only emotional processing but also economic and legal clarity. The earlier you seek professional advice, the better you can protect your interests and find amicable solutions. Do not hesitate to take stock of your assets early on and to explore your legal options.
The team at compleneo supports you with all questions relating to the division of assets upon separation and divorce. From the initial stocktaking through the negotiation of a divorce settlement agreement to tax optimisation, we accompany you holistically and with the necessary sensitivity.
