Getting a divorce
Divorce is the last thing on your mind when you get married or enter into a registered partnership. But if it does happen, you’ll want to know how your assets will be divided up – which is usually spelled out in the marital property agreement you selected. Contact your BCV advisor for advice on creating a new budget post-divorce and a review of your retirement and disability coverage and life insurance, to see if any changes should be made.
What you need to know
Who gets what?
If you get divorced, your household assets will be divided in accordance with the marital property agreement you chose initially. If you did not specify otherwise, the default agreement for married couples is that assets acquired after the marriage are jointly owned, whereas for a registered partnership it is that each person maintains a separate estate.
Under the first (“property jointly acquired”) agreement, the spouses keep those items in their possession before they got married as well as those that they inherit, but they share equally in the ownership of items acquired during the marriage. Any debts remain with the individual debtor. Under the “separate estates” agreement, there is no joint ownership of property.
Splitting social security benefits
When a couple divorces, the social security contributions they made during their marriage are added together and then divided in half. Only those years during which both spouses worked and contributed to the Swiss social security system count. This mechanism is intended to improve the future social security benefits of the spouse whose income was lower during the marriage.
What happens to your occupational pension and individual retirement accounts?
Occupational pension assets accumulated during the marriage are shared equally. This is applicable regardless of the marital property agreement you chose. They are considered vested benefits acquired during the marriage and are divided up. The division of any third-pillar (individual retirement account) assets depends on your marital property agreement. Under the “property jointly acquired” agreement, third-pillar assets are shared equally. Under the “separate estates” agreement, each person keeps his or her third-pillar assets.
Who gets the family home?
Couples who choose the default marital property agreement and who buy a home together usually decide to be equal co-owners of the home, even if they did not contribute equally to the purchase. If they divorce, their property is divided according to their marital property agreement with each spouse being entitled to the proportion that he or she contributed at the time of purchase (and this includes rights to any capital gain). It is therefore very important to record who paid what for your home and how. One complication that can arise is when one or both spouses used part of their occupational pension for the downpayment.
Drawing up a new budget post-divorce
Take time to assess your financial situation
Getting a divorce can have a major impact on your personal finances. You should review your income and expenses along with your investments and retirement savings – they may all need to be adjusted to accommodate your new lifestyle. Your BCV advisor can help you take stock of your assets and consider future needs and opportunities. If necessary, your advisor will refer you to the right specialist.
You’ll probably have to cut back on spending after the divorce, and you’ll need to look at ways to build your retirement savings back up. Divorced people are entitled to a higher limit for purchasing past years of their occupational pension.