Expats often stunned by financial consequences

Are you aware of what it means for you?

If not, you are advised to find out. In the Netherlands, for marriages concluded after 1 September 1992, the 1978 Hague Convention on Private International Law decides when couples with an international dimension are subject to Dutch matrimonial property law or to the corresponding law of another country. The following example will illustrate the importance of being in the know.

Example

A British couple, married in 1994, moves to The Netherlands in 1998 and lives there ever since. Which matrimonial property law is applicable during which period?

Well, strange as it may seem, English law would apply for the first 14 years of their marriage; however, from 2008 onward, after having lived in The Netherlands for 10 years, the Dutch rule of ’community of property’ would automatically apply to the matrimonial property. In practical terms this means that, in the unfortunate event of a divorce or one of the spouses – or parents, for that matter – passes away whilst abroad in 2010, all property and debts would have to be shared between the partners. This means that you and your spouse’s assets and debts – acquired either previous to the marriage or amassed following an inheritance of gift – and independent of the name in which the assets or debts have been registered, are shared from the moment you were married.

The financial consequences are far reaching and would have been completely different would the divorce or death have occurred in 2006 or if the marriage was concluded before 1 September 1992.

What can be done about this?

Fortunately, these consequences can be avoided by concluding a pre-nuptial agreement with your spouse in which you designate which country’s law should apply to your matrimonial property. Or, if Dutch law is applicable, make a pre- or post-nuptial agreement to prevent your assets from falling in the community. On the termination of your marriage by divorce, the debts and assets are divided according to the terms of the contract.
Gifts and inheritances can also be left out of the community property provided this is stipulated in the will of the testator. In the two next weblogs my colleague Susan Meijler and I will deal with these topics.

You must, however, keep in mind that prenuptial agreements  you make in the Netherlands may not always be fully recognised  in other countries. Dutch nationals living abroad often assume that the Dutch regime of community of assets and property is applicable to their matrimonial wealth, if they were married in The Netherlands and have not signed any pre-nuptial agreement. This, however, is often not the case and things can get messy and complicated. A Dutch couple, married under Dutch law but filing for divorce in a foreign country might find that the international private law of the host country overrules the provisions of Dutch family law, most often to the detriment of the parties.

Should you have further questions, don’t hesitate to contact me.