Money’s status: a separately and/or an individually owned property?

27 11 2017

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Having a Ukrainian wife or even girlfriend (more rarely – a Ukrainian husband or boyfriend), you risk losing some of your money. The reason is that your involvement in such relationships implies your agreement to share your profits with your “life partner” during your cohabitation.

Ukraine follows the same approach as many other countries around the world by setting a joint matrimonial property status for all assets acquired by spouses during their marriage. There are some exceptions to this rule, namely, property obtained before marriage, the property that was inherited or accepted as a gift, and property acquired with the use of personal money is considered to be the individual property of each spouse, etc.

However, along with the traditional joint status for property in marriages, Ukrainian law also contains a unique provision that extends such joint status to property acquired in civil partnerships. This is governed by Article 74 of the Family Code of Ukraine, which prescribes that a woman and a man living together and not being married share all property obtained during their civil partnership. Importantly, no registration of the civil partnership is required, and there is no legislative minimum on the period of a civil partnership for the law to apply. Courts may establish the fact of civil partnership relations retrospectively based on any evidence of cohabitation.

That is why, if you obtain some money and deposit it in a bank, keep in mind that in the future your property rights to this money may be challenged by your wife or girlfriend. If that happens, in the course of litigation over property division, you will have to prove that the particular amount of money is your individual property. The entire process of property division is complicated and time-consuming.

Who is affected by the joint property regime?

Obviously, Ukrainian citizens fall under the scope of the mentioned rules. For nationality-mixed couples, the basis for application of Ukrainian family law to property issues is the couples’ last commonplace of living. To clarify, if a foreigner lives in Ukraine along with his Ukrainian spouse or girlfriend for some time and then they break up, their last commonplace of living will be Ukraine, and the Ukrainian laws will apply regardless of subsequent moves to another country for habitual residence. In Ukraine, those issues are governed by the Law of Ukraine “On Private International Law” and, in particular, its Chapter IX dealing with family relations.

It is worth mentioning that the private international legislation of many countries contains similar provisions and prescribes that courts must apply the law of the country of the international couples’ last commonplace of living. Consequently, even if a foreigner leaves Ukraine and starts living in another country, there is a possibility that local courts in the country will apply Ukrainian law to family and property relations of this person and his or her former partner.

How to eliminate the risks?

The joint property status is a default regime, which means that you can change and modify it according to your and your partner’s needs.

In the case of marriage, it is advisable to create a nuptial agreement. By a nuptial agreement, spouses may establish that all property acquired by them during their marriage will be their individual property, or regulate their property relations in another manner.

To avoid the risks of sharing property in a civil partnership, those who plan to live together should conclude an agreement that will preclude the joint status of their property.

Summarizing, to avoid complicated disputes related to ownership of money and other property, one should consider options that preclude the establishment of the joint property status or, in another preferred way, regulate the property relations between one's spouse or civil partner.

Published: Kyiv Post, #47, 24 November 2017

Author: Oksana Voynarovska