What is meant by the term “goods balance swing” ?
In a matrimonial property regime change, the community of accrued gains is first converted into a separation of property by means of a notarized marriage contract and then returned to the original community of accrued gains.
Purpose of the property status swing
This procedure serves to optimize the tax-efficient transfer of assets between spouses, particularly when one partner has accumulated significantly more wealth during the marriage. In a community of accrued gains, assets generally remain separate, and equalization only occurs upon divorce or death. However, if one wishes to transfer assets tax-free without dissolving the marriage, a gift would normally be required, which, however, provides for a tax-free allowance of €500,000 per spouse. Higher amounts would trigger gift tax.
Tax-optimized transfer to children
The marital property regime can be used to transfer assets within the marriage tax-free, thus preparing for a later, tax-optimized transfer to the children. ” If the assets are transferred to the spouse, both parents can pass on their full tax-free allowance to the children, so that every 10 years, instead of €400,000, €800,000 can now be transferred tax-free per child, ” explains lawyer István Cocron of the Cocron law firm.
Protection from creditors
A marital property regime adjustment can also be used to protect assets from creditors. Spouses are not liable for each other’s debts. If one partner is exposed to professional liability risks, their assets can be transferred to the other spouse to shield them from creditors.
Reduction of compulsory share claims of children born out of wedlock
Another benefit of the matrimonial property regime switch is the minimization of compulsory share claims by children born out of wedlock, for example from previous marriages.
How the freight depot swing works
To use the property regime switch, the spouses change from the statutory property regime of community of accrued gains to separate property by means of a notarized agreement. This separation creates a claim for equalization of accrued gains, which allows the wealthier spouse to transfer assets tax-free. Afterwards, they can revert to the community of accrued gains. This process can be repeated as often as desired to transfer assets tax-free at intervals.
Who is the freight depot swing suitable for?
For the average household, the marital property regime shift is often uninteresting. It is primarily useful for spouses for whom the gift tax allowance of €500,000 is insufficient or who have existing obligations in the form of children from previous relationships. The marital property regime shift is also suitable for substantial assets that are to be transferred tax-free to children.
Legal admissibility of the marital property regime swing
Even though the method may be perceived as a “tax loophole”, it is legally sound. Spouses are free to decide which marital property regime they wish to live under, and can change this multiple times.
Costs of the property swing
Since two notarized agreements are required, the process of changing one’s marital property regime (marital property regime) incurs considerable costs. The fees depend on the net worth of both spouses. For example, with net assets of approximately €3 million, the notary fees amount to €9,870 net, and with €4 million, approximately €13,070, plus VAT and expenses. One way to reduce costs is to record both agreements in a single document. ” However, it is advisable to do this only if it is solely about the tax-related transfer of assets and not about reducing compulsory inheritance claims, as the tax courts recommend a waiting period of six months if the latter is the objective, ” advises attorney Cocron.
