February 7, 2010

German ordered to repay house deposit to his in-laws after divorce

Posted in Divorce tagged at 9:26 pm by demetriagraves

If you’re going through a divorce in Germany, it’s not only a greedy ex that you have to contend with, now the in-laws may be after your money as well.

Judges in Berlin recently ordered a man who kept the family home after a divorce to pay back a gift of €29,000, that’s almost $40,000 from his in-laws that had helped the couple buy the house.

The ruling by the Federal Court of Justice has been interpreted as a landmark judgment which could allow in-laws to reclaim presents given to their child’s spouse if the marriage breaks down. I’m not sure what this ultimately means for cases in the U.S. but the decision certainly raises some interesting questions about what is gift and who owns the marital assets. Hey, what’s next? Will we see all the wedding guests starting to demand their wedding gifts back after divorce?

In this case the Berlin Judges said that the “contractual basis” of such presents depended on the in-laws’ child being able to enjoy the fruits of the gift. That basis no longer applied after a divorce.

“If the child benefits from the gift for a long period of time (for example if the couple lives together in a house donated by the in-laws), then only a part of the gift must be paid back,” the judges said in their ruling.

“If the parents want to avoid this and make sure that only their own child benefits from the gift, then they should offer it only to that child,” the court added.

I wouldn’t be surprised if we saw more of this type of case, especially in this day and age where many couples are relying on financial help from family to purchase their first home. Even with prenuptial agreements becoming more common, parents who offer this financial support to their married children, may wonder what will happen to the gift in the unhappy event of a divorce. So this increase in prenups may be driven by parents who are concerned that, if the marriage breaks down, they won’t be able to prevent any money or property that they gifted to their children from passing out of their child’s hands.

If you are given an asset in marriage then the court has to decide whether or not to disregard it or take it into account during a divorce settlement. In most cases they will not be able to disregard it, unless it is protected by a prenup, which might not hold up anyway, or it is put in some sort of trust which can be expensive and tax-complicated.

Interpretation of the law here means that once an asset is paid over it is assumed to be a gift, unless you can prove that it is not, in which case it would fall into the pot and it is up the court to decide how to deal with it.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: