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Advice on separation and divorce settlement agreements

Waterproof contracts for the time after

In the event of a divorce, the German family courts only regulate one single consequence of the divorce, namely the division of pension entitlements acquired during the marriage (pension splitting). All other financial and child-related issues must be settled by the spouses themselves; the courts do not take any action in this regard. Ideally, the spouses will settle all the consequences of separation and divorce by mutual agreement in the form of a separation and divorce agreement, provided that they have not already made appropriate arrangements in the form of a prenuptial agreement.

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Contents of a separation and divorce  agreement

Typically, the following topics are regulated in a separation and divorce agreement:

  • the division of assets, in particular with regard to joint real estate and accounts of the spouses,
  • the allocation of joint debts (joint and several debt settlement),
  • possible modifications of the pension splitting

Difference between a prenuptial agreement and a postnuptual (divorce settlement) agreement

Marriage agreements can be concluded between spouses at different points in time during their marriage. Accordingly, a distinction is made between the following types of agreements:

Prenuptial agreements

These are often concluded shortly before the wedding or even afterwards, for example if one spouse gives up their job due to the birth of a child or starts a self-employed activity.

Crisis and separation agreements

These are concluded after a marital crisis occurs, with or without separation.

Postnuptual (divorce settlement) agreements

These regulate the consequences of divorce in the event of a specific divorce.

Court settlements

These are concluded to settle court proceedings regarding the consequences of separation and/or divorce.

Timing and course of negotiations

In principle, it is advisable to start discussing the consequences of separation and divorce at an early stage in the event of a final separation, unless a prenuptual marriage contract already exists. Some issues will arise naturally, such as the question of who will remain in the matrimonial home, with whom the children will live in the future and how much support payments will be required after the separation. The mandatory one-year cooling-off period between the separation and the court hearing of the divorce case should be used to come to an agreement with the former spouse on the most pressing financial issues and the care of the joint children.

These negotiations can also be held in the period between filing for divorce and the divorce hearing. The advantage in this case is that the record date for calculating the equalisation of gains and the pension splitting is set when the divorce petition is served. After the divorce petition has been served, the court arranges for the pension information to be obtained, which gives the spouses several months to negotiate. During this time, the claim for equalisation of gains can be determined and, if necessary, modifications to the pension splitting can be discussed on the basis of the available pension information.

In any case, the spouses must initially provide each other with information about their current incomes for the purpose of calculating maintenance and about their respective assets on the relevant record dates of marriage, service of the divorce petition and, if applicable, additionally at the time of separation for the purpose of calculating the equalisation of gains.

The lawyer’s tasks in drafting the contract

In Germany, this information is not obtained under the aegis of the family court, but only at the instigation of the spouses themselves. In this respect, the involvement of experienced specialist lawyers in family law is highly recommended. They will coordinate the processes, carry out the necessary calculations for you and ensure that all the pieces of the puzzle fit together.

Experienced family lawyers will always ensure that the allocation of existing assets is clarified first, such as the ownership and usage rights to real estate or cars, as well as the allocation of existing liabilities, such as credit debts. This is important to remember because practically all legal separation and divorce consequences are interdependent, i.e. interlinked. For example, the spouse who takes over the jointly owned home when the couple separates has to have a so-called housing benefit credited against him or her in terms of maintenance or he or she has to pay a compensation for use.

Care must also be taken with regard to the right timing of any planned property transfers or equalisation of gains. Tax aspects play a central role here, since transfers of assets between spouses in Germany are generally subject to gift tax. An experienced family lawyer will advise you comprehensively on this as well. As a precaution, a tax expert should always be brought on board to avoid undesirable tax effects.

Judicial review of separation and divorce settlement agreements

Pre-nuptial and divorce-related prenuptial agreements are generally subject to judicial review, whereby a distinction is made between the so-called effectiveness review at the time the contract is concluded and the exercise review at the time the contractual provisions are given effect. The courts are required to correct such agreements ‘that lead to a recognisably one-sided distribution of burdens if this is an expression of a disturbed contractual parity’. This was decided by the Federal Constitutional Court in 2001. There is now a comprehensive body of case law on this, which must be observed when drafting prenuptial agreements and divorce settlement agreements. In this respect, too, legal advice should always be sought when concluding postnuptual marriage agreements.

Form of a separation and divorce agreement

The conclusion of a separation and divorce agreement is usually subject to formal requirements, in particular if it contains provisions on post-marital maintenance, equalisation of gains or pension splitting or if real estate is transferred. The agreement must then be notarised before a notary. Otherwise it is null and void.

As long as the agreement does not include any real estate transactions, but only regulates the legal consequences of divorce, it can alternatively also be recorded in court at the divorce hearing. The judge then either reads the entire agreement out loud or submits it to the parties involved for confirmation. The agreement will then be added to the minutes of the court hearing as an attachment.

Contact

Do you want to regulate the financial and property-related consequences of your separation in a legally secure manner?

You can contact me by phone at any time during my office hours, or by email outside office hours. I will get back to you as soon as possible.

Mon-Fri: 9.00 – 13.00 and 14.00 – 18.00

T: 06174 – 935 75 70
E: marx@familienrecht-marx.de

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