Friday, May 8, 2015

What kind of marriage do you have?

Turns out that there is an added complication for foreigners moving to Spain that have married outside Spain. You need to decide whether your marriage is a “community property” (bienes gananciales) marriage or a “separation of assets” (seperacion de bienes).

Update: there's a third kind called "participación", where you have a separation of assets, but you have a joint right to all income in the marriage. This has the advantage that you don't need to worry about gift taxes if you give money to each other that comes from salary, etc.

A notary told me that the default comes from wherever you got married, so if you were married in a community property state in the US, for example, by default you may be considered as having this state.
Your property type has an impact on a couple aspects of your life here:
  • For community property, almost all assets (except those acquired previous to marriage, inherited and a couple other exceptions) as owned 50/50 by both spouses, regardless of the title of the account. The dreaded Modulo 720 rears its ugly head here: if one of you have a foreign account only in their name, both of you need to declare it on your 720 form. The owner declares as owner, and the other declares as having rights to the account.
  • Wealth tax works differently if you are in "bienes gananciales": for everything that isn't privately owned (eg pre-marriage and other exceptions), you split it 50/50 regardless of the actual title. 
  • Income taxes can be filed separately and your community property status doesn’t affect this. If you have interest from an account only in your name, only you have to put it on your declaration.
  • Gift tax applies when a couple has “separation of assets” and a transfer is made between accounts that have different owners.


Juan said...

Bienes ganaciales still excludes the money you had before getting married. If I'm not mistaken, in the US, you share both the money you had before as well as the debts.

I guess this only has meaning on case of divorce. So you can move to the country where everything looks better if you have to get divorced, right?

santcugat said...

In the US, it depends on which state you lived in (some are community property states, some are not, and Louisiana is weird).

Your type of marriage does impact your wealth tax. For wealth tax, you split everything (except premarriage) 50/50 if you are gananciales vs by title if you are separate. Also creditors can come after you for debts that are only in the name of your partner if you are gananciales.