Marriage contracts concluded shortly before death are not considered a gift

On February 16, 2024, the Supreme Court will issue an important ruling for notarial family law practice. Is it permissible to agree on unequal divisions in the marital property regime in prenuptial agreements to save tax?

Our colleague Mitchell van den Bosch discusses the judgment below.

If you are already married or have considered marriage, you have most likely been confronted with the option of a prenuptial agreement. Without a prenuptial agreement, the statutory regime applies. If you married before 1 January 2018, full community of property applies, which means that all existing and future assets and debts of you and your partner are jointly owned by the marriage [1] . For marriages from 1 January 2018 onwards, the statutory community of property has become more limited: assets and debts that were yours alone before the marriage remain yours alone. Assets acquired and debts incurred after the marriage do become joint property [2] . During the marriage, spouses are each entitled to half of the marital property. With a prenuptial agreement, you can deviate from this statutory system.

In the present case, the spouses entered into a marriage in 2015 without a prenuptial agreement. However, the husband became seriously ill. In 2017, during their marriage, the spouses entered into a prenuptial agreement, in which they agreed that the husband would henceforth be entitled to 10% of the assets and debts of the community, and the wife to 90%. The husband died within two months of signing the prenuptial agreement. [3] Upon the death of one of the spouses, the marital community must be divided. The surviving spouse's share will go entirely to the surviving spouse, and the deceased spouse's share will be acquired by the surviving spouse, either alone or together with other heirs, through inheritance law. Inheritance tax is therefore due on the deceased spouse's share. In the present case, the deceased spouse, the husband, was only allocated 10% of the marital community under the prenuptial agreement. The wife could receive her share, 90%, tax-free based on the marital community. The question arose in court whether this is possible or not.

More specifically, the question is whether the prenuptial agreement should be considered a gift. In that case, inheritance tax would still be due on 40% of the marital property, and the woman would therefore not be able to acquire this tax-free [4] . This is because, for the purposes of inheritance tax, everything donated by a testator within 180 days prior to the death is deemed, under inheritance law, to have been acquired by the death [5] . In addition, the tax inspector invokes fraus legis , or abuse of the law. According to him, there was no other reason for entering into the prenuptial agreement than to avoid inheritance tax, particularly because the man was seriously ill and his death was supposedly imminent. [6]

The Supreme Court has ruled that entering into a prenuptial agreement in which spouses agree to equal shares of the marital community of property does not qualify as a gift [7] . A gift is defined in law as an agreement that aims at one party, the donor, enriching the other party, the donee, at the expense of their own assets [8] . The enrichment of the donee is therefore offset by an impoverishment of the donor. There must, as it were, be a shift in value from donor to donee at the moment of the gift. [9] According to the Supreme Court, the prenuptial agreement does not yet result in such a shift in assets from the assets of one spouse to the assets of the other spouse [10] . This shift in assets only actually occurs when the marital community of property is dissolved, in this case at the moment of the death of one of the spouses. At the time the prenuptial agreement is entered into, there is no such transfer of assets – which is necessary for a gift.

Furthermore, the Supreme Court also rules on the question of whether entering into a prenuptial agreement constitutes fraud in law . The fact that entering into a prenuptial agreement does not constitute a gift does not alter the fact that it can be seen as tax evasion in exceptional circumstances. This is the case when avoiding inheritance tax was the decisive motive for entering into the prenuptial agreement, and if, at the time of entering into it, it is virtually certain that the spouse who is therefore entitled to the smallest portion of the joint assets will die before the other spouse. [11] In that case, there is also a high probability that the transfer of assets intended by the prenuptial agreement will occur and thus that the objective of tax evasion will be achieved. This is the case, for example, when, as in the present case, one of the spouses is seriously ill.

However, the mere fact that one of the spouses is seriously ill is not sufficient to establish fraus legis [12] . In this case, it is judged that the above requirements are not met and therefore the plea of fraus legis fails. This is particularly so because there is no arrangement where it is 100% certain that a tax advantage will actually be enjoyed. After all, the wife could also have been the first to die, and in that case, the prenuptial agreement would have been very unfavorable from a tax perspective for her husband. The fact that tax savings were the basis for entering into the prenuptial agreement is therefore not sufficient to establish fraus legis . [13]

Conclusion
In conclusion, this ruling is very important for practice. Has the Supreme Court opened the door to more prenuptial agreements that stipulate unequal relationships? However, it will have to be assessed on a case-by-case basis whether there is a gift and/or fraud. Perhaps the Supreme Court has only made the judiciary more difficult, and we will only see more of these types of proceedings in the near future.

[1] Art. 1:94 paragraph 2 of the old Civil Code.

[2] Art. 1:94 paragraph 2 BW.

[3] ECLI:NL:RBNHO:2020:9677, para. 1.

[4] 40% is the difference between the woman's actual share of the community of property, 90%, and half (50%) of the community of property, to which the woman is entitled tax-free in any case according to the law.

[5] Art. 12 paragraph 1 SW 1956.

[6] ECLI:NL:HR:2024:239, para. 3.4.

[7] ECLI:NL:HR:2024:239, para. 4.2.

[8] Art. 7:175 paragraph 1 BW.

[9] Ploeger, in: T&C Civil Code , art. 7:175 BW, note 1.d.

[10] ECLI:NL:HR:2024:239, para. 4.2.

[11] ECLI:NL:HR:2024:239, para. 4.3.1.

[12] ECLI:NL:HR:2024:239, para. 4.4.

[13] ECLI:NL:RBNHO:2020:9677, para. 15.