Most UK solicitors are not necessarily familiar with matrimonial property regimes as it’s not something that we have within our laws.
Matrimonial Property Regimes (MPR) are a fundamental part of law in many other countries, however, and so when dealing with clients with overseas connections, it’s something that UK solicitors should be aware of, especially when it comes to succession planning, wills, probate and divorce.
Our unfamiliarity with the concept of MPR can also be difficult for many foreign lawyers to understand, which can lead to frustrations where lawyers are dealing cross border.
So, what is a matrimonial property regime? Who do they apply to? And why is it important for UK solicitors to be aware of them?
What is a matrimonial property regime?
A matrimonial property regime (MPR) is a formal, binding contract entered into between spouses on marriage which outlines the ownership of the couples’ assets on death or divorce. They can also be applied to civil partnerships in some cases.
The relevant regime (see type of regimes below) usually takes effect before any assets devolve under a will (similar to the way in which the rights of survivorship apply when assets are held as joint tenants). This is why it’s important to know about the existence and application of an MPR before preparing a will or dealing with an estate administration for foreign clients or clients who have links to other countries.
What types of MPR are there?
An MPR usually takes one of the following forms:
- Separation of property (similar to tenancy in common); Essentially this regime means that property, whether owned before or after marriage is owned separately by the party that paid for it;
- Universal community of property (similar to joint tenancy); This regime provides that all property of the marriage is owned jointly by the spouses, except for gifts and inheritances; or
- A combination of the two (i.e. community of acquisitions, deferred community of acquisitions, equalisation of gains).
MPRs are usually entered into at the point of marriage and a ‘default’ regime will apply, although it is usually possible to select an alternative regime (some jurisdictions also permit a choice of law). It is even possible to have two or more regimes apply to the same couple in different countries depending on the circumstances. They can also be entered into and changed after marriage. It’s also possible for an MPR to cover only specific assets, like property.
Who do MPRs apply to?
Many civil-law and bijuridical jurisdictions have statutory default matrimonial regimes. Which is why, it’s so important to check with foreign clients or clients who have links to other countries whether there is an existing MPR.
Depending on the jurisdiction, there may be different connecting factors to associate individuals with a particular MPR, such as:
- Nationality (of either or both parties)
- Domicile (of either or both parties)
- Habitual residence (of either or both parties)
- Location of immovable property (of either or both parties)
As of 29 January 2019, new legislation affecting EU matrimonial property regime regulation, which aims to harmonise the application of MPRs and CPRs across signatory states. Currently there are 18 signatory states (‘member states’): Austria; Belgium; Bulgaria; Croatia; Cyprus; Czech Republic; France; Finland; Germany; Greece; Italy; Luxembourg; Malta; Portugal; Slovenia; Spain; Sweden and The Netherlands.
The following 10 states have not signed up at this stage: Estonia; Denmark; Hungary; Ireland; Latvia; Lithuania; Poland; Romania; Slovakia and the UK.
However, UK nationals will be affected where they own assets in signatory jurisdictions and an MPR applies to them or their spouse.
Why is it important for UK lawyers to understand MPRs?
MPRs are one of the building blocks of cross-border planning and it’s important to note that despite MPRs not existing in the UK system, British nationals can be affected by them as mentioned above and they can apply to movable assets under English law.
An MPR overrides a will when it comes to asset distribution, therefore the incorrect application of an MPR for succession purposes could mean that the assets are distributed incorrectly. So, it’s crucial to understand whether there is an MPR in place before distributing assets from an estate.
Likewise, when assisting clients with estate-planning you need to be aware beforehand whether an MPR applies to ensure you can advise them correctly. MPRs are one of the reasons that wills are not as common in civil law jurisdictions.
If you’re dealing with a client where an MPR may be applicable and need assistance, contact Worldwide Lawyers on 01244 470339 or email email@example.com and we’ll be happy to connect you with a lawyer in the appropriate jurisdiction.