Divorce: Beware of financial issues!

In 2021, according to the Federal Statistical Office (FSO), the number of marriages in Switzerland amounted to 36,410 (+ 3.55% compared to 2020), while the number of divorces was 17,159 (+5.85% compared to 2020). Experiencing divorce requires keeping a cool head on the part of both spouses and this is not always easy due to the multitude of emotions that accompany such a situation. In order to see the future again with peace of mind, it is essential to understand the different financial issues relating to divorce and to be well informed about the measures that can be taken to protect against potential unpleasant surprises in the longer term.  

Real estate, pension provision, private wealth, alimony: what happens in the event of divorce?

At the AVS level :

As soon as the divorce is finalized, the sum of contributions accumulated by each spouse during the years of marriage is "split" and half is transferred to each person's individual account. The sharing of AVS contributions also concerns bonuses for educational tasks and assistance tasks. This rule applies regardless of the matrimonial regime.

To know :

✓ the sharing request must be expressly made to the AVS, splitting is not automatic.

At the pension fund level (LPP) :

Regardless of the matrimonial regime chosen, the savings built up within the pension fund are also shared. The calculation is based on the assets accumulated, including interest paid, between the date of marriage and the date of initiation of divorce proceedings. The creditor spouse receives the amount owed to him in his employer's pension plan, or failing that in a vested benefits account. In the event that the spouses renounce the sharing of the pension, the judge can still decide to invalidate this waiver.

To control :

✓ Are there certain amounts that would not be subject to sharing under the law?

✓ If the amount must be transferred to a vested benefits account: how can we optimize its use?

✓ Can the pension gap following divorce be filled and under what conditions? Are there any tax restrictions?

The 3rd pillar :

For private, optional insurance, sharing will depend on the matrimonial regime chosen.

3rd pillar A :

In the case of the acquisition participation regime, savings must in principle be shared, unless the contributions were made by own property (which can be difficult to demonstrate). If the marriage was concluded under the community property regime, the savings of the 3rd pillar A will be shared between the two spouses, unless the marriage contract expressly specified the exclusion of the 3rd pillar A. In the case of a marriage under the regime of separation of property, the 3rd pillar A is not subject to division at the time of divorce.

To know :

✓ The gap cannot be filled here by buying back the amount paid in the divorce proceedings. However, developments in the law could fill this gap.

3rd pillar B :

there is no rule, the judge in charge of divorce can rule according to the matrimonial regime chosen.

Mortgage & real estate :

The sharing of real estate assets is one of the main concerns in the event of divorce. A main or yield residence belonging to the spouses in co-ownership must be the subject of an agreement within the framework of the division and its division will depend on the liquidation of the chosen matrimonial regime, on the basis of the current value of the property in question. In the presence of a mortgage loan, the question is more complex. If the debt was concluded jointly, the spouses are jointly and severally liable even if one of them leaves the accommodation. Even after divorce, each party is liable for the other's debts in the event of insolvency. In other words, a divorce does not end the mortgage contract that binds the spouses to the Bank, and it must be kept in mind that very often early termination can generate heavy penalties.

To control :

✓ Under what conditions can one of the spouses take over real estate on their own account? What financial compensation should be expected?

✓ What guarantees will be sufficient for the pledgee to disengage the non-buyer spouse from the said property?

Maintenance contribution :

Recent changes in the case law of the Federal Court have tightened the conditions for granting alimony after age 45, in response to changes in society. Case law thus gradually adjusts to the progression of the social model, the old norms no longer being relevant.

And the divorce of retirees ?

If the two future divorcees are retired, the AVS pension becomes an individual pension for each retiree (with potentially an increase in the ceiling of this pension, the married couple's pension being capped at 150% of an individual pension). For the LPP pension, it is the divorce judge who will determine the amount allocated to each spouse. Finally, many platforms offer a wealth of information dealing with the legal aspects of divorce. We recommend completing the process by carrying out financial planning, a real roadmap and decision-making tool, which will give much more clarity on each person's situation before and after divorce, as well as before and after taking retirement.