The divorce reform, initiated in 2017 for amicable procedures, will continue in 2021 for contentious divorces. Here is an update and advice on how to anticipate these situations of voluntary separation.
Pragmatism and simplification, the legislator is in tune with couples in the process of separation. The law has in fact fully enshrined the right to separation by making divorce contractual. This diversion of divorce makes it possible to clear the courts and speed up the implementation of the separation, at a time when couples are made and unmade much more quickly than 40 years ago. A true barometer of our society, the legislative system is now flexible.
The legislator, the judge and the legal professionals must interact in a benevolent manner in order to formalise the separation and participate in a rapid, de-dramatised and effective settlement of the break-up.
The centre of gravity of divorce has shifted from the judge, who is the guarantor of a balance between the parties and the interests of the family, to the couple.
However, the separation should not be seen by its actors as a mere formality, without expertise or advice.
Although the subtleties of the procedures for formalizing a couple's separation are a matter for professionals, it is nonetheless worthwhile to review the various possible divorce paths and their terms and conditions since 1 January 2021, before addressing the fundamentals for securing the break-up process and instilling serenity.
What divorce reform from 1 January 2021?
Article 229 of the Civil Code refers to four cases of divorce which can be divided into two categories : amicable divorce and contentious divorce.
The distinction is whether the spouses are in full agreement on the principle and conditions of the divorce ("amicable" divorce) or whether they have points of disagreement ("contentious" divorce).
Reminder of the different forms of divorce
Amicable" divorce (divorce by mutual consent) Articles 229-1 to 232 of the Civil Code) :
Divorce by mutual consent has been completely diverted, except in the presence of minor children who ask to be heard by the judge or if one of the spouses is incapable(Articles 229-2 and 230 of the Civil Code). In these two cases, the judge remains the guarantor of the interests of the vulnerable parties and must therefore intervene and approve the divorce agreement.
This type of divorce implies an agreement by both spouses on the principle of divorce and all the property and extra property consequences (division of property, compensatory allowance, etc.).
The non-contentious procedure has recently been considerably simplified, allowing the divorce to be pronounced in a few weeks(law n°2016-1547 of 18 November 2016 modifying the law of 11 February 1975) :
- Choice by each spouse of a personal lawyer,
- Drafting of a divorce agreement detailing the patrimonial and extra-patrimonial points related to the separation and containing some compulsory mentions(article 229-3 of the civil code),
- Establishment of a liquidation statement, if applicable,
- The agreement is sent by registered mail to both spouses,
- Signature of the statement of account,
- Signature of the agreement by each spouse in the form of a deed under private signature countersigned by the lawyers, after a 15-day reflection period,
- Filing of the agreement with the notary within 7 days of signing the agreement, under which the divorce is pronounced.
Contentious" divorces:
There are three types of so-called "contentious" divorce: divorce on the grounds of acceptance of the principle of marriage breakdown (otherwise known as "accepted divorce"), divorce on the grounds of fault and divorce on the grounds of definitive alteration of the marriage bond.
Divorce on the grounds of acceptance of the principle of the break-up of the marriage ("accepted divorce") Articles 233 and 234 of the Code civil)
Here the spouses agree to divorce, but disagree on all or part of the property or extra property consequences of the separation (custody of children, division of property, etc.).
Divorce for fault (Articles 242 to 246 of the Civil Code) :
Despite the recent legislative effort to make divorce less dramatic, involving the dissociation of the causes of disunity from their property consequences, divorce for fault persists. In this type of divorce, one of the spouses expresses his or her intention to divorce because of a serious or repeated violation of the duties of marriage, making it intolerable to continue living together.
Divorce for definitive alteration of the marital bond (Articles 237 and 238 of the Civil Code) :
Opening the way to true freedom to divorce, this type of divorce allows the marital bond to be terminated when the cessation of the community of life between the spouses is proven.
contentious divorces: changes to the procedure from 1 January 2021
A new divorce reform came into force on 1 January 2021. The petitions for contentious divorce filed since this date no longer require a conciliation phase and start directly with a hearing called "orientation and taking of provisional measures".
Abolition of the conciliation phase of contentious divorces
Contentious divorces still involve the intervention of the judge but the conciliation phase has been abolished.
The purpose of this stage was to try to avoid the separation and at least to fix the provisional measures until the divorce judgment.
The abolition of the conciliation stage will reduce the length of the relatively long contentious divorce procedure (more than two years on average in 2018).
The other advance also concerns the date of the first hearing, which is known as soon as the summons is issued. For applications initiated since 1 January, the procedure therefore begins directly with the summons phase, issued at the request of one spouse or both spouses by joint application.
This request must contain, in particular, a proposal for the settlement of property and non-property interests as well as an updated statement of the spouses' assets. The aim here is to give the judge an immediate and clear view of the situation and the points to be decided.
Establishment of the orientation hearing and taking of interim measures
There is a single hearing ,known as the orientation hearing, at the end of which the judge examines the agreements and disagreements between the parties and decides on a judicial or conventional pre-trial settlement.
This stage allows the parties to exchange their conclusions and to respond to them. It can take the form judicial and is then carried out by the judge. It can also be conventional. The spouses then sign a participatory procedure agreement for the purposes of preparation and exchange views independently for a given period, assisted by their lawyer.
During this hearing, the judge also pronounces the provisional measures, making it possible to organise the life of the spouses and the family until the divorce judgement(Article 254 of the Civil Code). These measures may concern the terms of residence of the spouses, the occupation of thefamily home , the fixing of alimony, the provisional assumption of certain debts between the spouses, etc.
The divorce can also be pronounced without a hearing at the request of both spouses. Otherwise, a hearing will be held.
divorce for definitive alteration of the marriage bond: separation period reduced to 1 year
The law of 23 March 2019, which came into force on 1 January 2021, implies a separate residence of the spouses for 1 year instead of 2 years.
These changes reflect the search for greater flexibility and shorter procedures.
Regardless of the type of divorce, the separation should be well anticipated in view of its important property consequences.
focus on the points to anticipate
Divorce by mutual consent, without the intervention of a judge, is certainly the way to go.
It is nevertheless essential to surround yourself with qualified counsel and to ensure good coordination between them. Certain points at stake require specific attention, such as the date of dissolution of the marriage, the valuation of assets, the scope of the division and the method of payment of the compensatory allowance.
divorce without a judge but not without professionals
Although the trend is to favour so-called contractual divorces, it is still essential to surround yourself with legal professionals who will know how to coordinate.
Divorce without a judge?
The current trend is to contractualise divorce. Opting for divorce by mutual consent makes it possible to gain speed and limit costs.
Should divorce be left in the hands of non-lawyer spouses whose interests become divergent by the very effect of divorce?
Even when not in court and in the presence of very legible and easily divisible assets, divorce can take a few months.
The initial agreement may crack, especially as the issue for the future ex-spouses is that of a projection into their life afterwards, particularly from an economic and fiscal point of view (acquisition of a new main residence, expatriation, new union, new children, etc.).
Contractual divorce implies the absence of an arbitrator and sometimes negotiations not punctuated by the intervention of the judge. Hence the need to involve wise counsel. The situation is also complex when it comes to divorce of the company director.
Well-chosen advice
The new non-contentious divorce requires each spouse to choose their own lawyer to ensure free and informed consent.
The choice of a lawyer who provides clear and complete information on the civil and fiscal consequences of the divorce, and not only on the procedural aspect of the divorce, is essential. Between firmness and flexibility, the chosen lawyer will have to know how to find the "wrong" arrangement to avoid the "right" trial.
The intervention of a joint notary is also important for deciding on points of property law which traditionally fall within his competence.
Complementarity of advice, while costly, can in fact be relevant and ultimately a source of savings.
Positive interactions between professionals
In the case of a divorce by mutual consent, the notary will have to file the divorce agreement drawn up by the lawyers in his office.
This filing will give the agreement enforceability and certainty of date and the divorce will then be pronounced.
A formal check is required on the part of the notary, who must ensure, on pain of nullity, that the compulsory information in Article 229- 3 of the Civil Code is included in the agreement.
It is therefore crucial to forward the draft agreement to the notary before the spouses sign it, in order to avoid having to reinitiate the procedure in the event of irregularities.
The goodcoordination of professionals on the articulation of the operations, makes it possible to privilege a short circuit, i.e. the concomitant signature of the liquidation statement when this one is established by notarial act on the one hand and the divorce agreement on the other hand, the same day and in the presence of the spouses.
This also avoids the unpredictability of signing the liquidation statement independently of the pronouncement of the divorce.
setting a relevant date for the dissolution of the union
This date is fundamental, especiallyin thecase of a community matrimonial regime as it determines the consistency of the spouses' own and common assets.
All property acquired by the spouses after this date is excluded from the joint estate and belongs exclusively to the acquiring spouse.
Article 262-1 of the Civil Code states that the divorce judgment takes effect in the relationship between the spouses, as regards their property:
- when it is pronounced by conventional mutual consent: on the date of the notarial deposit of the agreement under private signature countersigned by the spouses, unless this agreement stipulates otherwise
- when it is pronounced for acceptance of the principle of the rupture of the marriage, for definitive alteration of the marital bond or for fault: on the date of the divorce application (writ of summons or joint application) following the entry into force on 1 January 2021 of the reform of 23 March 2019.
Thus, one of the spouses who intends to acquire a property during the divorce proceedings would undoubtedly have interest in setting the date of dissolution of the union before the acquisition. Indeed, if the divorce was pronounced and final, the acquired property would then be his exclusive property. Otherwise, the acquired property would belong to the community.
The only thing left to do is to convince her husband, who may be sensitive to the arguments put forward if he is in the same acquisition situation or if there is a risk that his assets will change in the near future.
Thus and for example, a spouse who holds stock options would be well advised to set a dissolution date prior to the exercise of the stocks. The Court of Cassation has in fact ruled(Cass. Civ. I, 9 July 2014) that the exercise of these option rights enters into the community when the option is exercised during the marriage.
an exhaustive statement of account but a division limited to what is strictly necessary
The liquidation deed drawn up in the context of divorce by mutual consent of the spouses must be complete.
It is therefore not possible to exclude joint bank accounts before the dissolution of the regime or the sale price of a joint property.
Failing this, a reopening of the case after divorce would be possible and the penalties for handling stolen goods could be applied in the case of of fraudulent distraction by one of the spouses.
However, no liquidation is required if the property held in joint ownership by the separated spouses was sold before the date of dissolution agreed between the spouses.
A married spouse under a separatist regime will therefore have every interest inselling the undivided property before the chosen date of dissolution.
On the other hand, for the spouse with joint property: impossible to have the joint property or its price excluded fromthe liquidation.
One solution, however, is togive to the children before the date of dissolution would make it possible to reduce the base of assets subject to liquidation while anticipating a transmission to one's descendants.
Again, councils will need to anticipate these issues.
If the matrimonial regime must be liquidated exhaustively, it is perfectly possible to share only partially the joint property that has become undivided. In fact, it is possible to maintain indivision while the property is being sold and refer it to the legal arrangement or at a undivided ownership agreement prepared by a notary or lawyer.
At the time of the sale of the property, the division of the price between the two ex-spouses will not be subject to the division duty if the division is only verbal(Answer Valter (JOAN of 22 January 2013, n° 9548), BOFIP (BOI-ENR-PTG 10-10, n° 65)).
Reduced sharing duty in 2021 and 2022
The partition duty is based on the net assets to be divided. The narrower the base, the more tax is generated. The rate, initially set at 2.5%, was fixed by the Finance Act for 2020 at 1.8% from 1 January 2021. It will fall to 1.1% on 1 January 2022.
tactical" thinking on compensatory allowance
Article 270 paragraph 2 of the Civil Code teaches that " the compensatory allowance is intended to compensate, as far as possible, for the disparity that the breakdown of the marriage creates in the respective living conditions ".
The parties must agree, in the absence of a judicial relay, on the very existence of the compensatory allowance and fix its quantum.
As taxation is protean depending on the nature of the goods donated and the time limit for surrender, an in-depth analysis will be required to optimise the operation for its debtor.
Favouring the delivery of own property will allow toavoid a partition duty, which only applies to the delivery of undivided or joint property.
A delivery of own money will allow tocircumvent the capital gains tax issue applicable to the delivery of own real estate or company shares.
If the compensatory allowance is paid over less than 12 months or if property is awarded in kind: a tax reduction equal to 25% of the sums paid up to a limit of €30,500 (i.e. a total of €7625) is applicable.
After 12 months, a deduction of the amount of the compensatory allowance from the income is possible.
Consideration can also be given to the establishment of a mixed compensatory allowance: a capital sum paid immediately and a part paid over a period of more than 12 months.
a valuation adapted to the date of divided enjoyment
The values shown in the statement must be market values, i.e. values determined by supply and demand.
In case of undervaluation, a share top-up could be initiated by the ex-spouse who has been harmed by more than a quarter. In addition, the tax authorities could adjust in the event of of insufficient valuation during the recovery period.
In order to secure the transaction, it is recommended to use value opinions issued by real estate or accounting professionals to appraise the real estate and company shares.
An unequal and caused division between the spouses will undoubtedly be preferable to an egalitarian division established on the basis of questionable values.
The allocation of property within the framework of the division is not subject to capital gains tax in the event of a subsequent sale, as it is qualified as an intercalary operation: the spouse who receives the property will be considered the owner of the property at the value at which it enters the joint or undivided estate.
Unpreparedness and a lack of pre- and post-divorce support can be disastrous and make a difficult human situation worse. The separation can indeed take on highly conflictive aspects during the divorce period. Professional advisors (lawyers, notaries, asset management consultants, etc.) have more than ever a role to play in providing clarity to spouses in these situations.
https://blog-gestion-patrimoine.cfpb.fr/reforme-du-divorce-en-2021-les-cles-pour-une-separation-sereine-et-maitrisee/