Marriage regimes can be problem for entrepreneur
Business or marriage difficulties could cause problems for both business and marriage
JUSTICE Ministry officials are looking at easing restrictions on people changing marriage regimes due to potential problems for business people and their families.
When people get married in France they choose which set of laws – the régime matrimonial – apply to their assets and liabilities and these also have an important role in the case
of death and divorce.
If they do not choose, and the majority do not, they are automatically in the regime of communauté réduite aux acquêts (also called régime de la communauté) so property acquired since the marriage (but not inherited property) is shared. Previously-owned assets remain individually owned.
This can be a problem for entrepreneurs and their families as, until it changed in last year’s Loi Macron, a business problem could have cost a family their home. It can still mean losing bank savings, assurances vie and other property bought while married, to pay debts.
It can even mean the loss of the business if it has been built during the marriage.
Marne MP Philippe Martin asked the government to ease the restrictions on changing regime, especially the two-year wait before changing regime after getting married, and to look to cut the costs, which are linked to family wealth.
Mr Martin told Connexion: “The regime communauté réduite aux acquêts is less protective if one spouse is an entrepreneur, artisan or trader and gets into difficulties: their whole family wealth, including private portions, could be liquidated to meet business needs.
“I want to simplify and cut the costs of changing regime to protect the family’s savings.”
The Ministry of Justice said it was looking at ways to simplify the process, especially as it affected takeovers and buy-outs, potentially stopping people from proceeding.
In particular, the mandatory delay of two years from the date of marriage before changing regime could stifle plans.
Thinking of tax regimes is not the first thing on people’s minds before a marriage but needs to be considered, especially as starting a business or taking one over is not without risks and serious consequences.
British law does not recognise marriage contracts in the same way and UK marriages are seen as being in the séparation de biens regime where assets owned separately before marriage are the property of the person who paid for them or received them.
This continues into the marriage and includes any business started by one partner.
Items without a clear single owner, like the home, come under joint-ownership.
Bordeaux lawyer Etienne Moreau, an inheritance specialist, said for anyone starting a new business in France, the séparation de biens regime provides a large measure of protection as it gives the entrepreneur freedom in their own financial situation.
But Mr Moreau, of Fidal in Mérignac, said it was not so suitable in divorces, where the poorer party is disadvantaged if they do not have a separate source of income.
He said: “Courts will give a ‘prestation compensatoire’ to the disadvantaged spouse to cover their efforts in the marriage but this is not as generous as it in the UK.”
There is no such thing as the ideal regime – although staying married and keeping the business running simplifies matters – as each regime responds best in certain situations.
Changing regime need not be complicated but a family with young children will need a special court procedure.
In all cases it will cost money and must be done through a notaire and can only be done after two years of marriage.
Costs vary but start with simple notaire fees and then increase in direct relation to the value of the estate.
Another reason to change
- THERE are two main reasons to change marriage regime: one is for business reasons as outlined below, the other is for older people to protect the surviving spouse in the event of death.
- Nine out of 10 couples in France get married without a contrat de mariage and are in the communauté réduite aux acquêts. When one of them dies the succession includes all dependants.
- Opting for the regime of communauté universelle with clause d’attribution intégrale avoids this as all the estate goes to the survivor. Children only benefit on the death of the survivor.
