Matrimonial property and dividing assets

Which property regime applies between spouses?

The spouses-to-be may choose a property regime provided by law in their application to marry (PKS § 24 lg 1) [1]. The law provides three regimes:

• joint property (varaühisus) – things and other property rights acquired while the regime lasts become the spouses' joint ownership (PKS § 25) [2];
• accrual equalisation (vara juurdekasvu tasaarvestus) – each spouse remains the owner of their own property, but when the regime ends the part added to each spouse's property during the regime (acquired property, soetisvara) is equalised (PKS § 40) [7];
• separation of property (varalahusus) – it can be chosen on marrying or by a marital property contract (PKS § 57 lg 1) [8], and the spouses are then treated in property matters as persons who are not married to each other (PKS § 58) [9].

If the spouses-to-be choose no regime, the rules on joint property apply to their property relations from the marriage (PKS § 24 lg 2) [1].

The regime can be changed by a marital property contract, concluded before or during the marriage (PKS § 59 lg 1 ja 2) [10]. The spouses conclude it in person and in notarised form (PKS § 60) [6]. Towards third persons, such as creditors, the change has legal effect only if it is entered in the marital property register (abieluvararegister) or the third person knew of the contract (PKS § 61 lg 2) [11].

What is joint and what is separate property?

Joint property does not include either spouse's separate property (PKS § 27 lg 1) [3]. Separate property is:

• a spouse's personal belongings (PKS § 27 lg 2 p 1) [3];
• things the spouse owned before the joint property regime began or acquired free of charge, including by gift or inheritance (PKS § 27 lg 2 p 2) [3];
• units of a mandatory pension fund, money in a pension investment account and financial assets bought with it (PKS § 27 lg 2 p 4) [3].

Separate property does not, however, include expenditure that either spouse made during the joint property regime, in work or in property contributions, to gain benefit from the property (necessary and useful expenditure); its value is counted as joint property (PKS § 27 lg 3) [3].

A marital property contract can declare individual things joint or separate property (PKS § 27 lg 4) [3]. A spouse who uses their separate property in the interest of the joint property may demand that its value be compensated from the joint property (PKS § 34 lg 2) [12]; according to the Supreme Court (Riigikohus), they must prove the value of the expenditure made from separate property (RK 2-14-18828/113) [13].

Can one spouse sell joint property alone?

If the spouses manage the joint property together, they may enter into transactions with it only jointly or with the other spouse's consent (PKS § 29 lg 1) [14]. When a spouse disposes of a movable or a right, the other spouse's consent is presumed, and transactions for the everyday needs of the spouse and the family may be made without consent (PKS § 29 lg 1) [14].

A multilateral transaction made without consent is void unless the other spouse later ratifies it (PKS § 31 lg 1) [15]; if they do not ratify it within two weeks of receiving the other party's proposal, they are deemed not to have ratified it (PKS § 31 lg 3) [15]. A unilateral transaction made without consent is void; this does not apply to testamentary dispositions (PKS § 32) [16].

Under accrual equalisation, each owner disposes of their own things, but a dwelling used as the family home may be disposed of only with the other spouse's consent, unless a marital property contract excludes this restriction (PKS § 41 lg 1, 2 ja 5) [17].

How is joint property divided on divorce?

The joint property regime ends, among other things, on divorce, on the death of a spouse or when a marital property contract sets another regime (PKS § 35) [4]. The spouses then divide the joint property; division can be requested from the court together with the divorce action (PKS § 37 lg 1) [5].

• Composition and value. The composition of joint property is determined as at the end of the regime (PKS § 37 lg 1¹) [5]; according to the Supreme Court, the value of the things is taken as at the time of division (RK 2-15-9288/60) [18].
• Until division, the rules on managing joint property continue to apply (PKS § 37 lg 2) [5].
• Shares and method. Joint property is divided under the rules on ending co-ownership, in equal shares, unless agreed otherwise (PKS § 37 lg 3) [5]. Without agreement, the court may divide a thing in kind, give it to one owner who must pay the other their share in money, or sell it at auction (AÕS § 77 lg 2) [19].
• Debts. Obligations encumbering the joint property are performed in the course of division or divided between the spouses like other property (PKS § 38) [20].

How does accrual equalisation work?

• Acquired property (soetisvara) is the amount by which a spouse's total property exceeds their initial property; if the total property is smaller, acquired property is deemed to be zero (PKS § 47) [21].
• Initial property (põhivara) includes, among other things, property the spouse owned when the regime took effect and property received by gift, other free disposal or inheritance (PKS § 49 lg 1 p 1 ja 2) [22]. The value of property not proven to belong to initial property is counted as acquired property (PKS § 49 lg 3) [22].
• Reference date. On divorce, acquired property is calculated as at the filing of the application or action (PKS § 52) [23].
• Claim. If one spouse's acquired property is larger, half of the difference between the values goes to the other spouse as a money equalisation claim (PKS § 53 lg 1) [24]. The claim is limited to the value of the property the obliged spouse has left after deducting obligations at the end of the regime (PKS § 53 lg 2) [24]. At the obliged spouse's request, the court may reduce the claim, release them from performing it or allow payment in instalments if full or immediate performance would be unfair (PKS § 56 lg 1) [25].

Who is liable for a spouse's debts?

Under joint property, a spouse is liable in full with their separate and joint property for obligations assumed for the family's needs or arising from managing joint property, and for the spouses' solidary obligations (PKS § 33 lg 1 p 1 ja 2) [26]. A transaction a spouse makes to run the common household, in the children's interest or for the family's other ordinary needs creates a solidary obligation of both spouses, if its scope does not exceed a reasonable measure for the spouses' living conditions (PKS § 18 lg 1) [27].

For other obligations, each spouse is liable with their separate property and with joint property to half its value; a creditor may demand division of the joint property if it proves that the separate property is not enough to perform the obligations (PKS § 33 lg 3) [26].

What the law says

• „Kui abiellujad ei vali varasuhet abiellumisavaldusega või ei sõlmi abieluvaralepingut, kohaldatakse nende varalistele suhetele abielu sõlmimisest alates varaühisuse kohta sätestatut.“ [1] (translation: if the spouses-to-be choose no property regime in their application to marry and conclude no marital property contract, the rules on joint property apply to their property relations from the marriage; PKS § 24 lg 2) – joint property is the default.
• „Varaese loetakse abikaasade ühisvara hulka kuuluvaks seni, kuni ei ole tõendatud selle kuulumine abikaasa lahusvara hulka.“ [3] (translation: an item of property is deemed joint property of the spouses until it is proven to belong to a spouse's separate property; PKS § 27 lg 6) – a thing is separate property only once this is proven.
• „Ühisvara jagatakse abikaasade vahel kaasomandi lõpetamise sätete kohaselt võrdsetes osades, kui ei ole kokku lepitud teisiti.“ [5] (translation: joint property is divided between the spouses under the rules on ending co-ownership in equal shares, unless agreed otherwise; PKS § 37 lg 3) – equal shares are the rule.
• „Muude kohustuste eest vastutab kumbki abikaasa oma lahusvaraga ja pooles väärtuses ühisvaraga.“ [26] (translation: for other obligations, each spouse is liable with their separate property and with joint property to half its value; PKS § 33 lg 3) – for such obligations a spouse is not liable with the joint property in full.

What to do

1. Find out which regime applies in your marriage: whether one was chosen in the application to marry or a marital property contract was concluded; otherwise joint property applies (PKS § 24 lg 2 ja 3) [1].
2. Keep documents showing that a thing is separate property (for example gift or inheritance documents): without proof it is deemed joint property (PKS § 27 lg 2 ja 6) [3].
3. To change the regime, conclude a notarised marital property contract (PKS § 60) [6]; changes made under it are entered in the marital property register (PKS § 61 lg 1) [11].
4. On divorce, agree on dividing the joint property or ask the court to divide it together with the divorce action (PKS § 37 lg 1) [5]; until division the rules on managing joint property apply (PKS § 37 lg 2) [5].
5. When accrual equalisation ends, ask the other spouse for a written overview of their property; on divorce this duty arises from the filing of the application or action (PKS § 54 lg 1 ja 2) [28]. The equalisation claim expires within three years from the day the spouse learns that the regime ended, but no later than ten years after the regime ended (PKS § 53 lg 5) [24].

Frequently asked questions

Is property received as a gift or inheritance divided on divorce?

Not under joint property: things acquired by gift or inheritance are a spouse's separate property (PKS § 27 lg 2 p 2) [3]. According to the Supreme Court, property received by inheritance also includes property a spouse received when an estate was divided (RK 2-16-16114/65) [29]. The value of necessary and useful expenditure made during the regime, in work or property contributions, to gain benefit from the property is, however, counted as joint property (PKS § 27 lg 3) [3].

Is the mandatory funded pension divided?

Under joint property, units of a mandatory pension fund, money in a pension investment account and financial assets bought with it are separate property (PKS § 27 lg 2 p 4) [3]. Under accrual equalisation, a spouse's rights under state and mandatory pension insurance belong to their initial property (PKS § 49 lg 1 p 4) [22].

Can joint property be ended without a divorce?

Yes, by a marital property contract (PKS § 35 p 2) [4] or in court. A spouse may sue to end joint property if their rights are seriously endangered because the other spouse has repeatedly abused the right to manage joint property or, without sufficient reason, does not take part in its proper management, or if the other spouse has breached the duty to maintain the family and this may seriously endanger the family's maintenance (PKS § 36 lg 1) [30]. When it is ended by the court, separation of property arises between the spouses (PKS § 36 lg 3) [30].

Can a spouse's creditor demand division of joint property?

Yes, if it proves that the debtor's separate property is not enough to perform the obligations (PKS § 33 lg 3) [26].