August 23, 2021
Marriage property can be a potential issue for couples from the beginning until the end of a marriage. In fact, more and more couples are using pre-nuptial agreements before they get married.
The Civil Code of the People's Republic of China ("Civil Code") is the primary regulating legislation in matters of marriage, including property inheritance and division. The Civil Code recognizes two regimes of property ownership by couples – joint property and personal property.
I. Personal property
Despite the fact that the Civil Code appears to favor joint property (more discussed later), it does recognise the existence of personal property.
All property bought or possessed before to the marriage, as well as proceeds of personal injury compensation, are included in the category of personal property.
If the donor or the dead declared that the property belonged solely to the recipient inheritor, inheritance and contributions acquired in marriage would be the personal property of the receiving spouse. This is an exception to the joint property presumption.
Personal property includes a spouse's everyday needs. These are products that are utilized in everyday life or in one's profession. Items such as books, computers, phones, clothes, and jewellery are examples of required goods.
'Other property that should be considered as a personal estate' is another form of personal property. If there is a disagreement over whether a certain property can be considered as personal property, this open-ended clause allows the courts to rule on a case-by-case basis.
II. Joint property
Unless the couple specifies differently, the Civil Code defines joint property as property obtained by one spouse throughout the course of the marriage. As a result, the Civil Code favours the presumption of joint ownership.
There is a large portion of the estate that is assumed to be joint property. Salary, company revenue, investments, intellectual property, inheritance, and contributions are all examples of these assets.
The list also contains an open-ended category called "other property that should be classified as joint estate," which again allows the courts to decide on a case-by-case basis whether a property should be treated as joint property.
The spouses are presumed to jointly own inherited property, gifts, and donations. As a result, unless it is explicitly indicated that the property is just for one of them, an inheritance, gifts, or a contribution received by one spouse is treated as the couple's joint property.
The Civil Code further emphasizes that regardless of the amount of money supplied by the spouse, a husband or wife has an equal right to dispose of a joint estate.
While the above general guidelines are clear, there are various exceptions (such as stepchildren's rights, widowed daughters-in-law or sons-in-law rights, etc.) and unusual scenarios (such as circumstances in which the right of succession might be revoked) that may apply to a given instance. In some cases, Chinese law may not be the only applicable law, which might lead to dispute on choice of law. Therefore, it is always advisable to approach a legal advisor with the specific issue in hand.
III. Debts
Any debt incurred by a spouse and which is acknowledged by the other spouse, or if the debt is taken on so as to meet daily family needs, the presumption is also that it is deemed as a joint debt. However, if one spouse incurs debt in his or her name individually, and the amount is beyond daily needs for the family, the debt may not be considered joint debt. Debt incurred through gambling or as a result of drug activity is also not a joint debt.
Finally, one thing that comes up quite a bit. If divorce is the outcome, the family courts in China can provide exclusive use of the house or matrimonial belongings during a divorce proceeding, but absolute settlements of property issues must be handled through separate petitions.
Please contact us (inquiries@chinalawsolutions.com) to get in touch with an experienced lawyer who can assist with marriage property matters in China. All inquiries are treated as confidential.