Why do we recommend that a party with assets who is entering into an international marriage with a Swedish citizen or resident should always consider entering into an international prenuptial agreement? Because the law of Sweden concerning the division of assets upon a divorce is unusual and can be devastatingly unfair to unprotected spouses who have significant premarital assets.
Fundamentally, without a prenuptial agreement, everything that each spouse owns, in whatever form and wherever it is located, is normally treated as marital property, at least as of the time a divorce case is commenced. There is normally no limit on the length of time the assets were owned before the marriage; no consideration to whether the assets were inherited from family members; and no consideration to the steps taken by the owning spouse to acquire the assets.
Technically, the Swedish system is that of a deferred community property regime. This means that, upon marriage, each spouse continues to own and administer all of his or her property throughout the marriage, but that each of the spouse has a special claim, called a “right in deferred community property,” to the assets of the other spouse. It is an implied right to one-half of the value of both spouses' marital property (including premarital assets), after deduction for debts. This means that when the regime is dissolved upon a divorce, the value of the marital property is to be shared equally between the spouses.
Accordingly, upon a divorce the assets will normally be divided equally between the spouses, without regard to the length of the marriage, the nature of the relationship, the contribution of either party to the source or the growth of the assets, or any other factors of fairness. If the parties are unable to agree on the details of the asset division, the determination is made by a Property Division Executor, who is usually a lawyer.
The spouse with the most marital property may choose whether the difference shall be equalized by a lump sum payment or by means of a transfer of assets of equivalent value.
The economically disadvantaged spouse may normally take over the joint home and the household goods, provided the other party is provided with compensation.
A spouse who is dissatisfied with the Executor's decisions may appeal to the District Court, and that court has certain powers to take considerations of fairness into account.
As I have so frequently recommended, it is always prudent for international couples who plan to marry to consider making an international prenuptial agreement. And the benefits of prenuptial agreements are generally multiplied when the parties are from different countries or have assets overseas or are living overseas.
But all of that applies very much more so whenever there is a possibility that the future spouses might end up divorcing under Swedish law.
In order to avoid the harsh results of Swedish family law, many Swedish couples choose to remain unmarried. For those who do marry, prenuptial agreements are extremely common.
Prenuptial agreements are generally enforced in Sweden. There is no requirement as to form or legal representation except that they must be in writing. They must be registered at a district court which then procures registration in a national register. Swedish courts have the power to make an award in derogation of the prenuptial agreement in order to avoid unreasonableness but if the spouses entered into the contract with full knowledge of what they were doing that power is quite limited.
Spouses may include a provision choosing the law of the country that is to govern their property relations, provided they choose the law of a country in which at least one of them was domiciled or a citizen at the time of the contract. Act of 1990 on International Questions concerning Property Relations between Spouses, sec. 272, para. 3 (1990) (Swed.).
Absent such a choice of law, the prenuptial agreement is governed by the law of the state in which the spouses established their domicile at the time of their marriage. Act of 1990 on International Questions concerning Property Relations between Spouses, sec. 272, para. 4(1) (1990) (Swed.).
Foreign prenuptial agreements will be enforced in Sweden if entered into in compliance with the law that governed the spouses' property relations at the time of the agreement. Act of 1990 on International Questions concerning Property Relations between Spouses, sec. 272, para. 5 (1990) (Swed.).
The Law Office of Jeremy D. Morley handles international prenuptial agreements globally, always working with local counsel as appropriate. We work closely with counsel in Sweden on prenuptial agreements for couples who are concerned that their divorce case might possible end up in Sweden. We commence all such matters with a consultation, usually by telephone. We consult on these matters with clients throughout the world. Contact us at [email protected]om.