One of the most common and widespread myths about marriage is that, in a community property regime, “everything you have becomes both of you.” This is not actually the case, since the legal reality is very broad and flexible. In this sense, Laura Lobo, an expert lawyer in inheritances and families, explains that, although a marriage is governed by the community property regime, there are assets that continue to belong exclusively to one of the spouses. These are called private assets and are regulated in article 1346 of the Civil code.
Lobo explains that “the famous saying ‘what is yours is mine and what is mine is yours’ is not entirely true,” since the law precisely distinguishes which assets enter the community property and which remain outside it.
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The law distinguishes eight types of private property
If we look at the Civil Code, it establishes eight categories of private property, which cannot be shared, even if the marriage is under a community regime. “They are assets that belong exclusively to you, even if you are married,” explains Lobo. These are:
- The assets, rights and animals that each spouse had before the marriage.
- Assets acquired gratuitously, such as an inheritance or a donation.
- Assets that replace other proprietary assets, for example, selling an inherited house and buying another with that money.
- Those acquired by preferential acquisition right that belongs only to one person, such as shares or business interests.
- Assets inherent to the person and not transferable between living persons, such as a life usufruct or a pension plan.
- Compensation for personal or material damage suffered by one of the spouses, such as those derived from a traffic accident.
- Goods for personal use that do not have extraordinary value, such as clothing or personal effects.
- The instruments necessary for the exercise of a profession, as long as they are not part of a common business.
Why it is important to know the difference
It is necessary to know this difference, because it is important (although no one wants it) in situations of divorce, separation and in cases of receiving an inheritance. “Many conflicts arise from not knowing that certain assets, even if acquired during the marriage, may continue to belong to only one of the spouses,” explains the lawyer.
Thus, in cases of dissolution of marriage, only the marital assets are those that are distributed, while the private assets remain outside of it. This difference also affects when paying taxes, as it can influence the settlement of either the property transfer tax (the well-known ITP) or the Personal Income Tax declaration.
What the Civil Code says
Community and private property is regulated in articles 1344 to 1361 of the Civil Code, which states that the community property regime implies that profits obtained indiscriminately by either spouse become common. Now, article 1346 explains what assets are left out.
Furthermore, the Civil Code clarifies that, if an asset cannot be clearly determined as private or community property, it is understood that it will be community property until the contrary is proven (as stated in article 1361). Hence the importance of knowing the origin and ownership of all assets.
Laura Lobo ends by explaining the importance of “knowing the difference between marital and private property” because “it can avoid many future conflicts,” she points out. In his words, “the law does not require that everything belongs to both of you; there are assets that will always be yours alone.”