Forever Together But Finances Apart? Nuptial Agreements And The Implications Brought About By The Community Of Acquests Regime Under Maltese Law.

Nuptial Agreements

Matrimonial planning is undoubtedly an exciting and joyful time for couples and therefore thinking about a prenuptial agreement might not come to mind. However, there are certain situations which may require couples to establish a marriage contract (Kitba taż-żwieġ) to set guidelines addressing both financial and non-financial aspects of their married life.

These agreements can be made either before marriage, referred to as 'ante-nuptial agreements' or 'pre-nuptial agreements' or after marriage, referred to as 'post-nuptial agreements' with the agreement of both spouses. According to Chapter 16 of the laws of Malta¹, these agreements form a new 'community' and define how the financial relationship within this community will be managed. Spouses can agree through a pre-nuptial or post-nuptial agreement that property acquired during their marriage will either remain separate or be managed under a system of community of residue with separate administration² ("CORSA")

Under Maltese law, marriages shall be governed by one of the following regimes:

1. Community of Acquests³: Where all property (movable and immovable) acquired by the spouses after the date of marriage becomes joint property, equally owned and managed by both spouses. However, assets owned before the date of marriage⁴ including inherited items and donations remain the separate property of each spouse.
2. Separation of Estates: Where each spouse retains sole ownership and control over their property, whether acquired before or after marriage.
3. CORSA: Where all acquisitions made by each of the spouses during marriage shall be held and administered by the spouse by whom such acquisition was made.

By default, Maltese law applies the community of acquests as the standard matrimonial regime. If no alternative arrangement is made through a public deed, marriage in Malta automatically establishes a community of acquests between spouses. In essence, this means that from the moment marriage is contracted by the spouses, any assets acquired, and debts incurred are jointly owned by both spouses, creating a shared estate. The spouses are in turn responsible for managing and administering the assets and debts within this estate.

Article 1320 of the Civil Code⁵ holds that the community of acquests shall comprise of:

• All earning, such as salaries of both spouses;
• The fruits of any properties owned by both spouses, including on paraphernal property;
• The fruits of the property owned by the children as is subject to the legal usufruct of any one of their parents;
• Any property acquired with monies or other things from the acquests, even if such property was acquired in the name of one of the spouses;
• Any property acquired with monies or other things which either of the spouses possessed prior to marriage, or which they acquired after the marriage in the form of donation or succession or other title, even if such property may have been acquired in the individual's spouse's name, saving the right of such spouse to deduct the sum disbursed for the acquisition of such property;
• Fortuitous winnings made by either or both spouses;

The legal assumption is that property owned by either spouse is assumed to form part of the community of acquests, unless proven to be, by either spouse, their individual paraphernal property. Albeit it is both spouses who will administer the property within the community of acquests, jointly, there are certain minor administrative acts (ordinary acts of administration⁶) that may be performed by the spouses individually. On the other hand, acts of extraordinary administration⁷, as defined under article 1322(3) of chapter 16, must be performed by both spouses, together.

Article 1327 of chapter 16 indicates which debts are chargeable to the community of acquests;

• Costs relating to assets forming part of the community of acquests;
• Expenses related to the administration of the community of acquests;
• Expenses incurred for the needs of the family including those for the education and upbringing of children;
• Obligations contracted by the spouses jointly;
• Debts relating to the ordinary repairs of personal property of either spouse if the fruits of the property are entering into the community of acquests;
• Any civil debt created by each spouse except those created by a civil remedy to a wilful offence.

Debts of a personal nature are initially charged against the paraphernal property of the respective spouse. For instance, if a creditor seeks repayment, they will first need to target the individual's paraphernal assets. If those assets are insufficient, the creditor may then pursue the spouse's share of the community of acquests, limited to 50% of its value. If there are still outstanding debts after exhausting the community of acquests assets, the creditor can then seek to claim against the paraphernal properties of both spouses.⁸

In the case of 'Sciberras Carmel Sive Charles Pro et noe vs Rhouni Youssef et.'⁹ the Court of Appeal held that:

"... Meta obbligazzjoni tkun assunta konġuntament mill-miżżewġin, kull wieħed mill-konjugi, in kwantu komparteċipi f'komunjoni, huwa kondebitur solidali. Dan mhux biss għaliex tali solidarjeta` toħroġ mill-kuntrattazzjoni innifisha iżda għaliex, kif fuq muri, is-solidarjeta` tidderivi minn provvediment speċifiku tal-liġi..."

".... Taħt ir-reġim matrimonjali tagħna l-unika deroga fejn ma jistax jingħad li teżisti din is-solidarjeta` huwa l-każ kontemplat fl-artikolu 1329 (1) tal-Kapitolu 16, u ċjoe fir-rigward ta' djun li jsiru minn xi ħadd fost il-konjugi u li ma jitbatewx mill-komunjoni tal-akkwisti. L-obbligazzjoni assunta minn dak il-konjugi ma tqiegħedx lill-konjugi l-ieħor fil-veste ta' debitur solidali. Dan il-prinċipju jopera indipendentement mill-fatt li l-konjugi jinsabu f'reġim ta' komunjoni. Hi biss il-kwota tal-komunjoni tal-konjugi (50%) obbligat li sussidjarjament tagħmel tajjeb, u dan biss f' każ li t-talba tal-kredituri kontra l-beni parafernali tiegħu jew tagħha tibqa' insodisfatta."¹⁰

In the case of debts arising from civil remedies relating to a willful offence committed by either spouse or from a trade, business or profession, creditors cannot pursue the paraphernal property of the non-offending spouse.¹¹ Instead, they may enforce claims only against the paraphernal property of the spouse responsible for the debts, up to the amount remaining unpaid from the assets of the community of acquests.

Marriage contracts can be modified, whether the changes concern financial or non-financial terms. However, under pain of nullity, marriage contracts must be formalized by a public deed and thus requiring that they are drawn up before a notary public. Prior to marriage a prenuptial agreement may be altered with the consent of all the parties involved.¹² Post marriage, modifications would require the court's approval, where the court ensures that the changes do not adversely affect the right of the children or any third parties. If no pre-nuptial agreement was entered into by the parties, prior to marriage, the spouses may create a post nuptial marriage contract with the authorization of the court to safeguard the interest of third-party rights.

Conclusion

While matrimonial planning is a joyful experience for most, it is crucial for couples to consider the importance of marriage contracts in establishing clear financial guidelines that will govern their future. Matrimonial regimes and pre-nuptial agreements are essential for outlining the financial relationships between spouses during their marriage and in the event of separation or divorce.

Footnotes

1 The Civil Code.

2 Article 1338, Chapter 16, Laws of Malta.

3 Article 1316, Chapter 16, Laws of Malta.

4 Paraphernal Property.

5 Chapter 16, Laws of Malta.

6 Article 1322, Chapter 16, Laws of Malta.

7 Article 1322(2), Chapter 16, Laws of Malta.

8 Article 1330, Chapter 16, Laws of Malta.

9 Court of Appeal (Inferior), Hon. Judge. Dr Philip Sciberras, 09/11/2005, Ref: 81/2003/1.

10 English version: Spouses are jointly and severally liable. Therefore, each spouse is responsible for the entire debt and thus, creditors may enforce their claims on either one of the parties, unless it relates to an act of extraordinary administration which must be performed by both spouses. The Court noted that the only derogation from the joint and several liability is through article 1329(1) of chap 16 of the laws of Malta.

11 Article 1324, Chapter 16, Laws of Malta.

12 Article 1243, Civil Code, Chapter 16, Laws of Malta.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.