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19 Jan 2024 Dividing assets after divorce: the important role of the reference date

The Supreme Court very recently issued an important ruling on the date of division of community property and the reference point for valuation.

Among other things, the Supreme Court's ruling in this case is of great importance if assets have to be divided. The (reference) date of the division turns out to be crucial in determining the amount of assets to be divided. Interested? Read the full post here.

One of the most complex aspects of divorce is the division of assets accumulated before or during the marriage. The way these assets are divided depends on the marital regime that applies: general community of property, limited community of property or prenuptial agreements.

Total community of property

In the Netherlands, for marriages entered into before 1 January 2018, the general community of property is the standard marriage regime if no prenuptial agreements have been drawn up. Under this regime, all assets and debts accumulated by both spouses both before and during the marriage are considered common property. In the event of a divorce, the joint assets are basically divided fifty-fifty, unless there are reasons to deviate from this.

Limited Community of Property

With effect from 1 January 2018, the standard marriage regime in the Netherlands has changed. If no prenuptial agreement has been drawn up, the limited community of property will now automatically apply. Under this regime, assets and debts acquired before the marriage or acquired after the marriage by gift or inheritance remain private property of the respective spouse. Everything else is considered common property.

Nuptial Conditions

Spouses can also choose to draw up prenuptial agreements before they get married. In these, they can make agreements on the division of assets in case of divorce. These agreements can be very detailed and tailored to the wishes of the couple. Drawing up prenuptial agreements offers the greatest degree of flexibility in arranging the financial aspects of a marriage.

In divorces, inheritances, or other situations where joint assets need to be divided, it is essential to determine the extent of these assets and when this division will take place. These are crucial aspects of the legal process, as they determine the rights and obligations of all parties involved. In this article, we will discuss the extent of common property to be divided and the reference date of division.

The extent of common property to be divided

Regardless of the marital regime, the reference date for determining the extent of assets to be divided is the date on which the petition for divorce is filed with the court. The assets and debts present on that date are included in the division or set-off. The applicable matrimonial property regime determines whether and how the assets and debts play a role. The extent of assets to be divided can range from real estate, such as houses and land, or business assets, such as shares in a private limited company, to movable assets, such as money, vehicles, and personal property. All assets and debts acquired or created on or after this date are usually excluded from the division and remain private.

It is important to make a complete inventory of the assets present on the reference date before distribution can take place. This inventory should be accurate and detailed to avoid overlooking important assets or liabilities. It may be necessary to engage experts, such as valuers or accountants, to establish the value of certain assets, especially if complex financial assets or business interests are involved.

The reference date of distribution

The reference date of division is the time when the value of the common property is determined for the purposes of division. This date can vary, but the starting point in divorce cases is that this reference date is usually the date on which the property in question is actually distributed. This is only different if the divorcing spouses agree on a different reference date together or if, in exceptional cases, reasonableness and fairness require a different reference date.

Although this principle seems quite clear, there is often confusion about this reference date.

More clarity on the reference date by the Supreme Court

The Supreme Court has recently (HR 8 December 2023 ECLI:NL:HR:2023:1722) ruled on the date of division of community property and the reference moment for valuation.

The Supreme Court's ruling in this case is important because it concerns the division of a community of property and the (reference) date of the division is a crucial issue in such cases.

In this case, the parties were married on prenuptial agreements which excluded any community of property. The husband sought to determine the distribution of five simple communities of immovable property between them in accordance with his proposal. On 14 December 2018, the court decided that four of the five immovable properties should be allocated to the husband subject to certain conditions in respect of the mortgage loans. Both the husband and the wife appealed the court's decision. The court eventually awarded the immovable property to the husband, subject to certain conditions. The court's decision was challenged in cassation.

The Supreme Court's ruling revolves around determining the correct date for the division of the immovable property, which is of great importance when valuing it. The Supreme Court concluded that the court had already determined the distribution of the immovable property on 14 December 2018, and that this date should be considered the date of distribution, regardless of whether the conditions regarding the mortgage loans had been fulfilled.

This means that the judgment of the trial court that used a different date is set aside and the case is referred to another court for further hearing.

The importance of this ruling lies in clarifying the rules regarding the date of division and avoiding confusion and disputes on this issue. It provides a clear guideline for judges and parties in the valuation of immovable property, but the guideline obviously also applies to the valuation of other assets to be divided.

Concrete application of the directive to the division of assets, leads to the conclusion that the all-important reference date of the valuation of the assets to be divided is, in principle, the date on which the court rules on how to divide. As court proceedings on division of assets can be rather lengthy, it may therefore be wise to agree on this date with the other party in advance if possible. This will make it easier to clarify the amount of the value of the assets to be divided and avoid uncertainty about it.

Dividing assets after divorce is a complicated process, especially for business owners with complex financial interests. It is essential to seek legal advice and hire an experienced and specialised lawyer to protect your interests and ensure that assets are divided in a fair and equitable manner. Whether you are married in general community of property, limited community of property or with prenuptial agreements, a specialised lawyer can help you navigate the legal process and guide you in achieving a fair division of assets.

Feel free to contact the highly experienced family law attorneys at SPEE lawyers & mediation for expert advice and support in your divorce case, for example, if assets are involved, if you are a business owner and getting divorced, or if you have other questions about divorce, division or maintenance.

SPEE advocaten & mediation Maastricht

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