Matrimonial Assets, Dissolution, Prenuptial Agreement: Overview of the Participation in Acquisitions

Pursuant to Articles 196-220 of the Swiss Civil Code, joint marital property is the ordinary matrimonial property regime for every married couple in Switzerland. It provides a framework for the property relations within a marriage and regulates how a property settlement takes place in the event of separation. In other words, it determines who owns which assets and how the partners' joint property or inheritance is divided.

The Four Categories of Property

1. Separate Property of Partner A
2. Separate Property of Partner B
3. Acquired Property of Partner A
4. Acquired Property of Partner B

Initially, it is assumed that there is no common property (community property). Each partner manages their assets largely independently. It's only when the participation in acquired property regime is dissolved – through divorce, annulment of the marriage, choosing another property regime, or in case of death – that the significance of this regime's "participation" becomes clear. In such cases, there is a monetary equalization of the acquisitions made by both partners during the marriage. In essence, jointly acquired assets are divided.

This is where the significant difference from separate property lies. In a separate property regime, both partners manage their separate property and acquisitions completely independently at all times. In contrast, under the participation in acquired property regime, when the regime is dissolved, the acquisitions are collectively evaluated and typically divided equally between Partner A and Partner B.

So, while you manage your separate property during and after the marriage on your own, you are required to divide the value of your acquisitions. However, the distinction between these two categories of property is not always obvious and may require negotiation. The Swiss Civil Code defines the legal distinction between both categories of property as follows:

Separate Property

According to Article 198 of the Swiss Civil Code, the following four types of assets are considered separate property:

• Items for your sole and personal use
• All assets that you brought into the marriage or received during the marriage without charge (e.g., inheritance or gift)
• Claims for compensation
• Replacements for separate property

Tip: It is possible to declare certain acquisitions or other assets as separate property through a marriage contract. You can learn more about the participation in acquired property regime in a marriage contract further down in this article.

Acquisitions

The rough definition of acquisitions in Article 197 of the Swiss Civil Code states that this category includes all assets acquired by you or your spouse for consideration during the marriage. Specifically, this includes:

• Your salary
• Income from your separate property
• Benefits from social insurance, personal or social welfare institutions, or pension fund benefits
• Compensation during incapacity to work
• Replacements for acquisitions

Burden of Proof in Case of Uncertainty

Anything that is not clearly separate property is initially considered an acquisition. While the distinction is clear for many assets, it is not always straightforward for others. For instance, if you want an acquisition to be considered your separate property during a property division dispute, you must be able to prove this unequivocally (Article 200 CC). If this proof is insufficient, by law, the value will be considered an acquisition and divided between both spouses.

In some cases, it can be quite useful to regulate a participation in acquired property regime within a marriage contract and modify specific provisions to suit your needs. Therefore, in such instances, it is referred to as a modified participation in acquired property regime. Generally, a marriage contract clarifies the following questions:

• Who owns which assets? (During and after the marriage)
• How will any increase in assets between the partners be divided?
• How will shared/mutual debts and participations be settled?
• How will goods or objects from your marital assets be allocated in the event of a separation?

Possible Modifications to the Participation in Acquired Property Regime:

Within a marriage contract, according to Article 199 of the Swiss Civil Code, you can declare that certain assets should not be considered acquisitions – or vice versa. Many people, for example, specify in a marriage contract that their business belongs to their separate property or exclude the partner from benefiting from the increase in value of their separate property. It can also address issues regarding the distribution of inheritance in the event of a partner's death.

Additionally, there is the option to calculate the participation differently in the event of a divorce. Instead of the usual 50:50 rule, you could set a division, such as 40:60. Alternatively, you can establish a proportional division or fix a specific amount. It's even possible to completely exclude participation or set conditions under which modifications apply – for example, depending on the reason for the property division dispute.

In the event of a divorce, the death of a spouse, or if you wish to choose a new property regime, a so-called property division dispute (güterrechtliche Auseinandersetzung) arises. You initiate the property division dispute directly with a court. The local jurisdiction lies where one of the spouses resides, and the substantive and functional jurisdiction is regulated by the respective canton. In case of an amicable divorce, the process is managed with a divorce settlement agreement, while in a contested divorce, a court decides the outcome of the dispute. If needed, consult a family law attorney.

The property division dispute under a participation in acquired property regime unfolds in six phases, concluding with a proposal for participation and its implementation:

1. Separation of property between Partner A and Partner B (Article 205 CC): In this initial step, you and your partner initially reclaim the assets held by each other and settle mutual debts. If there are joint assets, they may be attributed to one partner if they can demonstrate a legitimate interest, with the other partner receiving compensation in value.
2. Segregation of assets (Article 207 CC): Next, assets are categorized into separate property and acquisitions. The goal is to clearly allocate values to the different categories of property. Existing debts or increases in value during the marriage are also taken into account.
3. Evaluation (Article 211 CC): Now, the segregated acquisitions are assessed based on their current market value. This figure serves as the base value for the subsequent proposal, although any changes in value until the conclusion of the dispute may also be considered.
4. Addition (Article 208 CC): In some cases, it may be possible to add transactions bypassing one spouse or gratuitous transfers to third parties (within the last five years) to the value of the acquisitions.
5. Proposal for participation (Article 215 CC): The acquisitions of both partners are now offset against each other, and any debts are deducted. If there is a surplus (net balance), this forms the basis for the proposal. Typically, both you and your partner are entitled to half of this amount. If there is no surplus, this net balance is not considered.
6. Execution of claims: Finally, according to good property law practices, the claims generated by both partners during the process are enforced and implemented. Should you or your partner encounter difficulties in paying these claims, Article 218 CC provides for the possibility of a payment deferment.