Going your separate ways – matrimonial regimes, nuptial agreements and divorce

Perhaps the most common scenario that springs to mind when thinking of the impact of a matrimonial regime or nuptial agreement is the event of divorce. The election of a matrimonial regime (if applicable) or the creation of a bespoke nuptial agreement can have far-reaching consequences if a couple decides to separate later down the line. Anglo-French couples should certainly make themselves aware of the starkly different consequences that each option brings.

Matrimonial Regimes

Under French law, a specific matrimonial property regime will apply to each marriage. In brief terms, this is a set of rules relating to assets and liabilities held by a married couple. Spouses have the option to elect a regime and if they do not do so, a default regime will apply. The chosen regime impacts not only the spouses’ interests during their marriage but also the share of assets at the time of the dissolution of their union, whether it is by death or by divorce.

The default regime will depend on the law applicable, which, from a French perspective, will be determined by international or European instruments, and will depend on the date of the marriage celebration. Broadly speaking, the main criterion is the first habitual residence of the spouses after marriage. If no bespoke agreement has been signed and French law applies to the matrimonial property regime, the default regime is a community of property limited to acquisitions during the marriage (‘communauté réduite aux acquêts’).

By way of example: if both spouses are English and have their first common habitual residence after the marriage in France, then the default regime will be the French one. i.e. community of property limited to acquisitions. However, if the couple have their first common habitual residence after the marriage in England, English law will apply. As there are no matrimonial property regimes in England, under French jurisprudence their default regime will be treated as the separation of assets regime. The place of the marriage is irrelevant for this purpose.

If the spouses instead decide to select a matrimonial property regime under French law, they have several options: a community of acquisitions, participation in acquisitions, separation of assets, or universal community. These options can also be adapted – for example, a couple can choose a separation of assets regime with a “bubble” of community property, as long as it respects mandatory rules, called the “régime primaire”. These rules are provided for in the French civil code and include, for example, the protection of the family home, which cannot be sold without the consent of both spouses or the prohibition of depriving the surviving spouse of his/her right to stay in the family residence during the year following the breakdown of the marriage.

However, the spouses may wish to organise their relationship otherwise, with a much more bespoke feel. If so, they need to draft and sign a “contrat de mariage” before a Notaire, who is an impartial public officer acting as the counsel of both parties. It will confirm the rules that govern the spouses’ ownership and rights over assets, during the marriage and at the time of its dissolution, should it be by divorce or by death.

Importantly, French law does not allow spouses to agree in their marriage contract on maintenance provisions in case of a divorce. Such clauses can only be included in a marriage contract in limited cases, i.e. when the spouses choose a law applicable to maintenance that provides for such possibility, like English law for example.

In France, a valid marriage contract is fully binding on the court upon divorce as well as upon the death of one spouse. It can neither disregard the contract nor vary from its terms, even in case of a change of circumstances or on the grounds of fairness. The court ruling on the divorce will only exercise its discretion with respect to maintenance, as this cannot be provided for in the contract.

 

English Nuptial Agreements

Whilst not automatically enforceable in England and Wales, nuptial agreements are increasingly being upheld by the courts and judges are clear that appropriate weight must be given to the terms of an agreement entered into, particularly in cases where the spouses had independent legal advice.

The idea is that on divorce, the couple will convert the terms in their prenuptial agreement into a binding court order, and then implement them. The benefit of this approach is that there should be no surprises as to what either spouse is seeking, as it will have been negotiated prior to the marriage. The reasons for entering into a nuptial agreement can be vast, but it is usually to protect pre-acquired assets, trust interests or future inheritance. The agreement can make clear that, for example, any asset owned prior to the marriage will remain the separate property of that spouse in the event of a divorce.

If, for whatever reason, one spouse later does not wish to abide by the terms of the agreement and files an application in court, all will not have been in vain. Caselaw has clearly shown that significant weight is to be attached to a prenuptial agreement that is fair i.e. that does not leave either spouse in a predicament of real need. 

 

Private Client Considerations

Wills in Different Jurisdictions

On divorce any provisions that gift anything to a spouse no longer takes effect, and if a spouse is appointed as an executor or trustee in a Will, this will fail. It is therefore advisable to create a new Will at the very latest, once a final order in divorce has been granted. It is also possible to create an interim Will (after separation but whilst spouses may be negotiating a financial settlement).

Spouses should also bear in mind that if they marry again or form a civil partnership, any Will will be automatically cancelled unless the Will makes clear that the individual was expected to be married to a particular person and the intention was that the Will would not be revoked by that marriage. If not, when that individual dies then their estate would pass in accordance with the laws of intestacy. 

Under English Private International Law, immovable property (i.e. land) passes in accordance with the law where is it situated. So where there is real estate in France, advice should be sought on putting in place a French Will to take into account different succession rules, namely “forced heirship” in France and to help the probate process as there is no need to translate an English Will. If advised to do so, this would be reflected in any English Will.

 

What if I have neither a Nuptial Agreement nor an applicable Matrimonial Regime?

Finances can be dealt with in a variety of ways following a separation and the option chosen will largely depend on considerations such as aspirations for the future, personalities involved and the complexity of the family finances. It can be as laid back as negotiating together “around the kitchen table” all the way through to engaging in the court process.

Should one spouse choose to file an application at court, a disclosure exercise will follow during which both spouses must disclose all assets worldwide along with documentation in support. A settlement is then negotiated on the basis of what is in the ‘pot’ with a view to ensuring that both spouses are left with sufficient to enable them to move on with their lives. The process can be long and drawn out but the spouses can agree on a deal at any stage. If this is not possible, a judge at a final hearing will hear the evidence and make a decision that is imposed on the spouses. It is standard practice to complete this disclosure exercise even in cases where no court application has been made.  

Whilst there is no set formula that a court works with to decide how the finances should be split, the judge in the exercise of their discretion, must have regard to what are known as the “Section 25 factors” (referring to Section 25 of the Matrimonial Causes Act 1973, the Act which sets out the powers of the court to make financial orders on divorce). Amongst others, the judge must have regard to the welfare of any children, the income, earning capacity, property and other financial resources of both spouses, the standard of living and contributions made.

The classification of assets as matrimonial (and therefore by default in the marital pot for division) or non-matrimonial (not included in the pot by default but can be brought in if needs require) can cause significant arguments which may have been alleviated somewhat had there been a matrimonial regime elected, or a nuptial agreement signed.

 

Conclusion
 

The above is a very broad overview and no two cases are alike. However, what is clear is that in situations where it may be important to the spouses to define, for example, whether assets brought into the marriage are ring-fenced, or inheritance protected, legal advice should be sought at the outset.

Our final blog will cover the impact that a matrimonial regime or nuptial agreement has in situations where there has been a significant change in one or the other spouse’s fortunes during the course of the marriage.

Further information

If you have any questions regarding this blog, please contact our Anglo-French team.

About the authors

Colleen qualified as an Associate in the Family team in 2017. She is committed to resolving matters in a pragmatic and amicable fashion, and is fully focused on achieving the best outcome for her clients. She regularly works with intermediaries on cases, such as therapists and financial advisors, to ensure clients have the support that they need.

Sophie is a partner in Kingsley Napley's Private Client team. She focuses on advice to UK resident and/or domiciled clients regarding wealth structuring, estate planning and trusts, with a particular interest in any cross-border taxation and succession issues for clients with international assets or who have relocated abroad. Sophie also has experience providing such advice in the context of matrimonial disputes and pre-nuptial agreements.

Flora Cassoudesalle is an associate at BWG Law.