What does division of property in a divorce mean?
Division of property is a process where the assets of the spouses are divided. The need for asset division can arise either from a divorce or the death of one of the spouses. The division of property can take place immediately after the divorce case has been initiated in the district court. The process starts when one spouse presents their claim regarding how the property should be divided. Property division is only possible in cases where the spouses have a right to each other’s property. If the spouses have a prenuptial agreement and have no right to each other’s property, rather than division, the property is separated.
The main rule of property division
As a general rule, in a divorce, the property division is carried out equally between the spouses. However, there are exceptions to this, for example, due to a prenuptial agreement. The spouses can carry out the division themselves, distributing their assets according to an agreement they make. Alternatively, the division can be carried out by a court-appointed estate distributor if the spouses cannot reach an agreement on how to divide the assets.
Assets with no marital rights
Assets that one spouse does not have marital rights to are those that the spouse has earned or received as an inheritance, gift, or through a will after the marriage ended due to the death of the other spouse, or those the spouse earned or received after the divorce application has been filed in the district court.
When can property division take place?
The initiation of property division requires that one spouse demands it. The division can take place immediately after the divorce application has been filed with the district court. Although there is a six-month contemplation period for divorce, this waiting period does not apply to property division, which can proceed as soon as the divorce case has been initiated.
How is property divided in the division?
As a general rule, in a divorce-based property division, the entire property of the spouses is divided equally between them. The assets that are subject to marital rights are calculated together and then divided, so each spouse receives half of the total assets. Practically, the division is done in a way that the spouse with more assets pays compensation to the spouse with fewer assets. The compensation can be paid in cash or by transferring property to the other spouse. The spouse giving the compensation has the freedom to decide how it is paid.
Effect of a prenuptial agreement on the division
A prenuptial agreement affects how the property is divided. The agreement may apply to the entire property of both spouses. If neither spouse has any marital rights to the other’s property, the division is replaced by the separation of property. In separation, the assets are not added together and divided equally, but each spouse keeps their own property.
In the prenuptial agreement, it is possible to exclude specific assets from the marital rights. In such cases, a division is carried out where all other assets are divided equally, except for those assets excluded from marital rights by the prenuptial agreement. These assets are excluded from the calculation and division.
How is property division carried out?
The spouses can carry out the division themselves, often with the assistance of lawyers. This is called a contractual division. In a contractual division, the spouses divide their assets according to an agreement they make. A division agreement must be created, signed, and the date of the division should be recorded. Additionally, the agreement must be witnessed by two uninterested parties.
Another way to carry out the division is through a court-appointed division. In this case, the court may, based on an application, appoint a lawyer as the estate distributor to carry out the division. A document is also created for these divisions, but only the estate distributor signs it.
The article was written by Tuula Rainto, attorney-at-law. You can always give her a 15 minutes consultation phone call without a charge. Phone +358 10 2995090.