Ooms for Tax
Divorce Estate Planning
Uniting the words divorce and estate planning in a single term requires further explanation. What does your divorce have to do with estate planning (literally inheritance or succession planning), certainly in the case of cohabitation and/or entering a registered partnership or even marriage?
Cohabitation or marriage
It happens ever day that people decide to cohabitate without putting anything down on paper about their cohabitation or the division of their property (cohabitation contract). But people who get married do not score any better on this point. More than 70%! of the newly-weds do not seek expert advice and, as a result, they do not record prenuptial agreements on paper. The law then determines that there is general community of property. In brief, this means that both partners have a right to 50% of the total capital of the spouses.
If nothing has been arranged prior to cohabitation and/or marriage, this usually does not cause any problems during the cohabitation or marriage. The problems occur during divorce (ditto by decease), because nothing has been provided for. So who gets what and what did the former partners’ income look like? If there are minor children involved, a legal battle often occurs. Organising this all properly in the midst of a (grim) divorce is often an arduous task!
Divorce and prenuptial agreements
Divorce Estate Planning can prevent these problems. Prior to cohabitating/marriage you can seek expert advice from your tax advisor and civil-law notary. With the help of this combined advice your cohabitation contract or prenuptial agreement can be drawn up. Divorce is not dealt with as a taboo, it is recognised as a real risk in the current times. This is taken into account when the cohabitation contract or prenuptial agreement is drawn up. An Exit clause resolves this problem when it occurs, as the fiscal aspects are taken into account as much as possible. This could include:
• Partner maintenance;
• Child maintenance;
• Deductible mortgage interest and surplus value rule (including the 30-year term);
• Sale or retention of own residence after the divorce;
• Company capital (sole trader, partnership or Ltd);
• Annuity linked to own home;
• Capital sum insurance;
• Other annuities.
It is also possible to include an entire divorce agreement in the prenuptial agreement, just as the conditions that apply during the marriage. It is usual for a new will to be drawn up after the divorce that is part of the Divorce Estate Planning.
If you would like more detailed information, you are more than welcome to contact
Georges L.A.J.M. Ooms for a free-of-any-obligation introductory meeting.