Estate planning: Liquidation of matrimonial property

When it comes to dividing an estate, it is essential to first liquidate the matrimonial property. The liquidation of matrimonial property consists in drawing up a list of the assets to be divided after the death of one of the spouses in order to establish the rights of the surviving spouse to the estate. Here’s why.

The actual content of your estate depends first and foremost on your marital status. If you are married, the composition of your estate will also depend on your matrimonial regime. In the absence of a financial agreement or valid will, civil partners (PACS) do not qualify as heirs.

When it comes to dividing an estate, the liquidation of the matrimonial property consists in drawing up a list of the assets to be divided after the dissolution of marital ties following the death of one of the spouses in order to establish the surviving spouse’s rights to the estate. This liquidation can be carried out after each spouse’s personal assets have been determined and any communal estate debts have been settled.

While the marriage contract can take any form subject to certain mandatory rules (e.g. legal order of inheritance), there are three basic matrimonial regimes in Luxembourg.

Statutory property regime

Based on the principle of community of property, this regime distinguishes three sets of assets:

• the personal assets of each spouse. These assets include property acquired before the marriage, personal items acquired during the marriage, and assets inherited or received as a gift during the marriage;
• the assets jointly owned by the spouses. These assets include the product of each spouse’s labour, the benefits and income from their personal assets, as well as assets acquired for valuable consideration by each spouse during the marriage.

All assets are divided into one of these three categories. For example, a building you owned before the marriage would remain your personal property. The same goes for assets that you receive through inheritance or as a gift while you are married. However, wages and income from moveable or immoveable property that you receive, is shared, even when this income comes from individually owned sources. Any asset for which neither spouse can prove ownership is automatically considered to be jointly owned.

For inheritance purposes, your estate will consist of your personal assets, plus half of the communal estate.

Separation of property regime

There are no jointly owned assets under this regime. Your respective incomes remain your personal property. Upon your death, your estate will consist solely of your personal assets.

Universal community of property regime

Under this regime, your personal estate is limited to your personal belongings and rights, such as clothes, professional equipment, etc. Everything else is part of the community of property.

Upon liquidation of this matrimonial property, each party in theory receives half of each item included in the shared assets. Under the universal community regime, the marriage contract can include specific clauses benefiting the surviving spouse, by providing for a share greater than one half (subject to statutory limits).