How are assets and property divided by german divorce law?

When a couple divorces in Germany, their increases or decreases in assets are balanced through the process of matrimonial property equalization (Zugewinnausgleich). However, the distribution of household items (such as cars, kitchen appliances, washing machines, etc.) is governed by different rules. Read here an introduction to the distribution of assets and possessions in a divorce according to German law, accompanied by simple and understandable examples.

Divorce of Foreign Nationals in Germany

You can get a divorce in Germany if one of the following options is met:

• One spouse is of foreign nationality while the other spouse is a German national. The German partner can apply for a divorce in Germany. It does not matter whether the German partner has his/her usual residence in Germany. If the German partner lives abroad, he/she can still get divorced in Germany as a German national.
• A spouse of foreign nationality has his/her usual residence in Germany. He/she can also get a divorce in Germany as a foreign national.
• Both spouses have their usual residence in Germany. Nationality does not matter. Either spouse can apply for a divorce in Germany.
• One spouse is stateless or a refugee with a usual residence in Germany. Due to their regular residence in Germany, divorce is possible in the country. This residence should have lasted at least six months.

If the spouses dispute over household matters, possessions and assets, the German court is responsible not only for the divorce itself but also for these issues.

If both spouses live in Germany, your divorce will be processed according to German law. However, if you mutually agree to have your divorce processed under foreign law, that is also possible. But if you want to handle your divorce efficiently, it's generally advisable to proceed under German law. The reason being, German courts are naturally familiar with German law and often face difficulties understanding laws written in foreign languages.

Matrimonial property equalization divides shared assets and values

If you got married in Germany, your marriage is considered a community of accrued gains. If you wish to exclude the equalization of accrued gains during divorce, you can stipulate this in a prenuptial agreement resp. in a marriage contract (however, notarial certification is mandatory). The rationale behind the equalization of accrued gains is that spouses jointly manage their finances during the marriage, and each contributes to the other acquiring assets and wealth. A typical scenario is when one spouse is not employed but manages the household and takes care of the children, while the other earns money and perhaps advances in their career.

According to the law, the equalization of accrued gains takes place if the accrued gains of one spouse exceed those of the other. The excess amount is divided between the spouses, with the one having the higher accrued gains paying out the other in cash. The spouses can also agree to balance out the accrued gains by transferring other assets.

Which key dates are crucial for the marital property equalization (Zugewinnausgleich)?

To determine the marital gain, the initial assets at the time of the marriage are first identified. The key date is the day of the wedding. Initial assets refer to the wealth one spouse has, after deducting liabilities, at the time of marriage.

In the next step, the final assets are determined. Final assets are the wealth one spouse has, after deducting liabilities, at the time of the divorce. The key date for the final assets is the day on which the divorce application from one spouse is delivered to the other by the family court. Assets and property values acquired by a spouse after the key date of the final assets are not taken into account.

The marital gain includes any type of asset increase. Only inheritances and gifts are excluded. The reason is that inheritances and gifts are of a highly personal nature and were not jointly acquired by the spouses. However, if a spouse wins the lottery, the lottery winnings are considered as an asset increase and are included in the marital gain.

Example: 

Your final assets amount to €25,000. Your spouse's final assets amount to €100,000. Both of your initial assets at the time of marriage were € 0. The increase in your spouse's assets exceeds your increase by €75,000. Thus, the gain is € 75,000. According to the legal provision, you would be entitled to half = €37,500.

How is the matrimonial property equalization to be done?

The matrimonial property equalization is a claim for cash. It does not alter the existing property relationships. You do not have the right for your partner to transfer half of their owned apartment to you. Conversely, your partner has no right to demand you grant them ownership rights to your assets. The matrimonial property equalization is always "just about the money."

Nevertheless, you can voluntarily agree to transfer other assets instead of cash.

Do household items also get divided through the matrimonial property equalization?

No. When spouses separate, asset growth is balanced through matrimonial property equalization. However, the distribution of household items is subject to different rules.

Household items are all objects that you purchased for your shared life in marriage. As a rule of thumb, each spouse owns a co-ownership share. The following principles apply.

What belongs to me, what belongs to my partner, and what belongs to both of us?

Personal items belong to the respective spouse. 

For instance: If you inherited your grandfather's stamp collection, since you did not purchase it with your spouse and it wasn't intended for shared life use, it is your personal property. Or: If you purchased a sailboat primarily for your own use. If you can prove your ownership without doubt or if ownership is undisputed, the item solely belongs to you.

Washing machines, kitchen appliances...

When dividing household items, the primary consideration is a physical division. You must agree on who gets what. If in disagreement, let fate decide by drawing lots or rolling dice. 

For instance: Physical division means one gets the washing machine while the other gets the dryer; one gets the fancy cutlery while the other gets the fine coffee set. However, there's no claim to a compensatory payment for half the item's value if one spouse takes an item.

Gifts to each other, e.g., jewelry

Gifts remain gifts unless you've stipulated that the gift should be returned in the event of a divorce. This especially applies to jewelry gifted to a partner.

Built-in kitchen

If the issue is the built-in kitchen and it is inseparably linked to the apartment, rendering it substantially affected by removal, it is deemed an integral part of the apartment. The kitchen shares the fate of the apartment. Whoever is the apartment owner or takes sole ownership also gets the built-in kitchen as inventory.

Pets

Pets are usually jointly acquired and generally belong to both spouses. After separation, the pet should live with the spouse best equipped to care for it in terms of 

• time, 
• profession
• and personal capacity. 

Consideration is also given to who has cared for the pet and whom the pet has a special emotional bond with.

Car

Being registered as the vehicle's keeper doesn't necessarily make you its owner. Instead, ownership is deduced from various circumstances. You own the car if...

• you're named as the buyer in the purchase agreement, 
• you paid for the car with your own money,
• you financed the car in your name,
• you're registered as the keeper in the vehicle documents,
• you primarily used the car yourself, or
• you need the car for professional purposes.

Who decides on household goods if the couple can't agree?

If there's disagreement about the allocation of household items, the family court will ultimately decide. The court will initially work towards a mutual agreement. If an agreement remains elusive, the family court can assign household items at its discretion.

Divorce consequence agreement on matrimonial property equalization and household contents

It's advisable to determine the matrimonial property equalization and the distribution of household contents in advance through a divorce consequence agreement (Scheidungsfolgenvereinbarung). By doing so, you can save on divorce costs since the court would otherwise have to deal with it. This also prevents a court from having to address your personal, and in some cases intimate, items. 

Our law firm can assist you in drafting such an agreement and of course advise you on all other questions concerning the distribution of assets and possessions, and of course the divorce filing itself. 

Please confidently reach out to us using the contact form below. 

Warm regards, Oliver Worms