Matrimonial property regimes under Luxembourg law: separation of property and statutory community of property

When couples wed it is vital to give serious thought to choosing the right matrimonial property regime as it will dictate how their assets will be managed and divided in the event of separation or on the death of one of the spouses. Amendments can be made throughout the marriage in line with changes in the spouses’ personal circumstances. Read on to find out more about the features of two matrimonial regimes: community of property and separation of property. The article will also outline some of the amendments that may be made to these arrangements.

This article is intended for Luxembourg tax residents

Statutory community property regime

If couples marry without a pre-marital agreement, the statutory community property regime appliesr by default. But spouses can also choose community of property by agreement. This regime, which involves a high degree of solidarity between the spouses, is characterised by three sets of assets: the joint assets and the individual property of each spouse. The joint assets include a spouse’s salaries and income from work or commercial benefits, as well as dividends, interest income and/or income from real estate acquired during the marriage. Property they owned before their wedding and assets received through inheritance or gifts are the spouses’ own property.

Diagram of community property regime

Each spouse can contribute all or part of their own assets to the community property. For example, if a couple decides to jointly finance works in the primary residence belonging to one of the spouses, it could be a good idea to contribute that residence to the community property. In this case, the contribution constitutes an amendment to the pre-marital agreement and must be done by notarial deed. Other amendments are also possible. For example, assets can be transferred from the community property to one of the spouses’ own property.

Separation of property regime

Under the separation of property regime, there are two sets of assets. Each spouse retains ownership of their own assets. Any income earned during the marriage, such as salaries, is owned separately by the spouses. It is important to remember that a pre-marital agreement is required when spouses choose the separation of property regime, which means they must use the services of a notary.

Nonetheless, couples married under the separation of property regime can decide to create a shared pool of assets acquired during the marriage. They each can contribute movable and/or real property to this common pool. This arrangement may be useful to protect the surviving spouse on the death of the first spouse, for example if the main residence is part of the predeceased spouse’s own property.

Custom allocation of assets

In addition to these arrangements, both regimes may be amended by a whole series of clauses (preciput, accretion, etc.) which allow for a preferential and/or optional allocation of assets on separation or on the death of one of the spouses. These amendments can be made at any time during the marriage, depending on the level of protection sought by the couple and the tax implications.

Our tax and estate planning experts remain at your disposal to analyse your situation and provide you with any assistance you need either for your upcoming marriage, or to amend your pre-marital agreement.