Division of property on separation and divorce

What is a division-of-property agreement (bodelingsaftale)?

A division-of-property agreement is a legal agreement between two spouses about how their joint assets are to be divided on separation or divorce. The agreement replaces the formal division of the estate and gives the parties the ability to determine the distribution themselves, rather than letting the probate court decide.

In Denmark, division of property is governed by the Act on Spouses' Financial Affairs (lov om ægtefællers økonomiske forhold, previously the marriage-effects law), which came into force on 1 January 2018. The starting point is that spouses share the joint estate equally on separation.

Community of property vs. separate property: the starting point for the division

Before you can understand what is to be divided, you need to know the difference between community of property and separate property.

Community of property

Community of property is the starting point in Danish marriage law. All assets that the spouses acquire during the marriage are as a rule community property, and are to be divided equally on separation.

It is a share of the estate (bodel), the portion each spouse owns of the joint estate. On an equal division, both spouses receive 50% of the net joint estate (assets minus debt).

Separate property

Separate property is wealth that is exempt from division. Separate property can arise:

• Via a marital property agreement (ægtepagt) made during the marriage
• Via inheritance or a gift specifically designated as separate property
• Via a testamentary condition from a third party

Separate-property assets do not enter the division and are retained by the spouse in question.

What is included in the division?

When the parties are to calculate the joint estate, the starting point is:

Assets:

• Real property (owner-occupied home, holiday home, rental property)
• Bank deposits and securities
• Car and other vehicles
• Pension schemes (certain types)
• Business value (complicated, seek professional advice)
• Household contents and personal belongings

Less debt:

• Mortgage loans and bank loans
• Overdrafts
• Other debt obligations

The net joint estate (assets minus debt) is as a rule divided equally.

Pensions

Pensions are treated separately in the Act on Spouses' Financial Affairs. As a rule, pensions are taken out of the division and retained by the spouse who paid into them. Pension equalisation can, however, take place in certain situations, for example in the case of very uneven pension savings after a long marriage.

What is an unequal division?

The parties can agree an unequal division, where the distribution deviates from 50/50. This requires agreement and must be documented in writing in a division-of-property agreement. Reasons for an unequal division can be:

• A spouse has given up a career to look after children
• A spouse has brought a particular inheritance into the marriage
• The parties want to avoid selling the family home

What must the division-of-property agreement contain?

A division-of-property agreement should as a minimum contain:

1. The parties

Both spouses' full names, addresses and CPR numbers.

2. The separation or divorce date

When was the separation/divorce registered with the Agency of Family Law (Familieretshuset)?

3. Statement of the joint estate

A detailed list of:

• All assets with a stated value and who takes over what
• All debt with an indication of who takes over the payment obligation

4. Distribution of real property

If you own a home together, you must agree:

• Does one party take over the home? At what price?
• Is the home sold? How are the proceeds distributed?
• Who bears the risk and costs until a sale?

5. Equalisation of shares

If a spouse takes over assets to a total value above 50%, they typically have to equalise the difference by payment to the other spouse. Agree the payment terms clearly.

6. Signatures

The agreement must be signed by both spouses. Consider having it confirmed by a lawyer or notary.

The process: from separation to completed division

Step 1: Apply for separation or divorce The application is submitted to the Agency of Family Law (familieretshuset.dk). If you agree, you can as a rule be divorced directly. If you do not agree, you can instead be separated, and after a separation period of 6 months either of you can demand a divorce. If you have children under 18, special rules may apply (for example a reflection period), so check the current rules with the Agency of Family Law.

Step 2: Calculate your wealth Make a complete statement of assets and liabilities. Obtain a valuation of real property if necessary.

Step 3: Negotiate and enter into a division-of-property agreement Reach agreement on the distribution and set it down in a written division-of-property agreement.

Step 4: Registration for real property If real property is transferred, the deed must be registered. This requires payment of a registration fee.

Step 5: Complete the division When all assets and liabilities are distributed and the agreement is signed, the division is complete.

What happens if you cannot agree?

If the parties cannot reach agreement on the division, the matter can be brought before the probate court. The probate court then appoints an estate administrator who conducts the division. This is typically slower and more expensive than a private agreement.

Many people choose to use a family-law lawyer as a mediator to reach agreement without going to court.

Division-of-property agreement and children

The division-of-property agreement only governs the division of wealth, not questions of custody, contact and child support. These questions are dealt with separately via the Agency of Family Law and, if necessary, the Family Court.

If you have agreements about the children, you should draw up a custody agreement and, if necessary, a contact agreement.

Common mistakes in division of property

Forgetting pensions Pensions are complex, make sure to clarify whether pension equalisation is to take place before you sign the division-of-property agreement.

Unclear valuation What are the home, the business or the investments worth? Put specific figures on it with supporting documentation.

Taking over debt without a clear agreement with the creditor Agreeing internally who pays a joint loan does not release the other spouse towards the bank. Make sure the bank releases one spouse from the liability.

No agreement on household contents Household contents are rarely divided in writing, but conflicts about furniture, art and personal belongings are very common. A short list can save many conflicts.

Create the relevant documents with LegalDock

LegalDock offers templates for a marital property agreement (ægtepagt) and a will, two documents that are particularly relevant on separation. A marital property agreement can be created before the marriage or during it to establish what is separate property and what is community property.

Note: A division-of-property agreement is a complex legal document with major consequences. We always recommend that you seek advice from a lawyer specialising in family law before you sign.