On Feb. 16, 2024, the Supreme Court ruled that entering into prenuptial agreements during the marriage does not constitute a gift, even if it entitles the spouses to unequal shares of the matrimonial community of property. Only in exceptional cases can entering into prenuptial agreements constitute law avoidance (fraus legis).
Present case
Spouses were married in legal community of property with the property ratio 50:50. They later entered into prenuptial agreements with the ratio 90:10. Within 180 days of the modified ratio of the prenuptial agreement, testator died. Because a ratio of 90:10 had been agreed upon, only a 10% inheritance of assets occurred to the surviving partner. Had the modification of the prenuptial agreement not taken place, an inheritance of 50% of the assets would have taken place. The inspector and the court therefore held that entering into the prenuptial agreement constituted a taxable gift.
No gift, but law evasion?
In its ruling, the Supreme Court first ruled that entering into prenuptial agreements during marriage does not constitute a gift, even if it makes the spouses entitled to unequal shares of the marital community.
However, in exceptional cases, entering into prenuptial agreements may constitute law evasion. Such an exceptional case occurs if:
- the avoidance of inheritance tax was the decisive motive; and
- it would be contrary to the purpose and spirit of the gift and inheritance tax if the transfer of assets between the spouses and the subsequent death of one of them were not regarded as an acquisition subject to inheritance tax under inheritance law.
This occurs if, at the time the prenuptial agreement is entered into, it is virtually certain that the spouse who thereby becomes entitled to the smallest portion of the joint assets will die earlier than the other spouse, causing the assets to shift from one spouse to the other. In that case, it must be assumed that the prenuptial agreement was entered into solely to avoid inheritance tax.
However, this is not the case in this instance, according to the Supreme Court. Not even since testator was seriously ill at the time the prenuptial agreement was made.
The man had been seriously ill for years, but it was unknown how long the illness would last so that it was insufficiently substantiated that the man would almost certainly die, the Supreme Court said.
Importance for Practice
In practice, it may be wise to take a closer look at the property relationship between partners. The Supreme Court ruling offers opportunities in the area of estate planning. Together with you, we are happy to seek appropriate advice.
Finally
Would you like to receive more information on this specific topic? Or would you like general advice on your wealth strategy? Then feel free to contact us via your relationship manager, via our contact form on the website or on our general phone number 040 - 2 504 504.