Note: Several articles on fiala.de deal with adjacent topics but are clearly distinct in content. “Divorce while resident abroad” deals with international jurisdiction and the applicable divorce law (Brussels IIb, Rome III), not with asset protection. “Family foundation as asset protection for emigrants” looks at the family foundation in the context of emigration in general, without reference to divorce. The present article takes its own, structuring and precautionary perspective: it examines whether and to what extent foreign structures – family foundation, trust, holding company – are suitable for protecting assets against a possible future divorce, and emphatically works out the legal limits of this approach, in particular the add-back of disloyal reductions of assets under Section 1375(2) BGB (German Civil Code) and the contestability of asset transfers.
Anyone who is wealthy or runs a business rarely thinks first of the equalisation of accrued gains when choosing a spouse. And yet practice regularly shows that precisely this question – what happens to the assets in the event of divorce – is underestimated for years, until it suddenly arises with considerable financial consequences. According to the Federal Statistical Office, around 129,300 marriages were dissolved in Germany in 2024 – a virtually unchanged figure after the historic low of the previous year since reunification. Anyone who is entrepreneurially active, holds assets abroad or plans an international family structure is therefore increasingly examining whether assets can be effectively protected against a future equalisation of accrued gains by placing them in a foreign structure – family foundation, trust or holding company. This article places the structuring options in context and at the same time discloses where German family law sets narrow limits on such arrangements that are frequently underestimated in practice.
A classification in advance that applies to the whole article: the question here is not how assets can be “hidden” from a spouse. Deliberately concealing assets to the detriment of the spouse is neither serious legal advice nor does it lead to a reliable result – on the contrary, it regularly increases the risk that the reduction of assets ultimately turns against the person who caused it. The subject of this article is serious, early and transparent structuring of assets within succession and business planning, which as a side effect can also have effects under matrimonial property law – if it is done in good time, in the right form and without any intention to disadvantage.
The Statutory Starting Point: Community of Accrued Gains and Its Scope
Without a marriage contract, spouses in Germany live by operation of law under the matrimonial property regime of the community of accrued gains (Zugewinngemeinschaft) (Sections 1363 et seq. BGB). This means first of all: the assets of both spouses remain legally separate during the marriage – each remains the owner of what belongs to him or what he acquires. Only in the event of divorce is the increase in assets earned during the marriage, the accrued gain, determined and equalised by half. What matters is the difference between the initial assets (at the start of the regime, as a rule at the time of marriage) and the final assets (at the time the divorce petition becomes pending).
Not every increase in assets is subject to equalisation. Under Section 1374(2) BGB, assets that a spouse acquires during the marriage by inheritance, advance succession or gift are added to the initial assets – they are thus treated as if he had already owned them at the time of marriage, and so, in the result, remain exempt from the equalisation of accrued gains. Protected, however, is only the asset substance itself, not an increase in the value of these assets that occurred during the marriage – that increase in value does flow into the accrued gain subject to equalisation. It is precisely here that the consideration begins whether business or family assets can be withdrawn from the reach of the equalisation of accrued gains by an early transfer into an independent foreign structure – structurally similar to a gift, only into a legally independent pool of assets instead of to a natural person.
Why Foreign Structures Come Into Play as a Structuring Idea
Anyone with business assets, real estate in several countries or an international family history often considers foreign structures anyway for tax, succession or liability reasons – the thought of an additional effect in the event of a future divorce is then close at hand. Three types of structure regularly stand at the centre of the consideration.
The Foreign Family Foundation
In a family foundation – whether established in Liechtenstein, Austria, Switzerland or elsewhere – assets are transferred to an independent legal entity, which from then on is itself the owner. The founder definitively gives up his ownership of the assets contributed; he or family members he has designated receive at most distribution claims in accordance with the foundation’s statutes. Since, under civil law, the foundation’s assets no longer belong to the founder but to the foundation, they formally also do not form part of his personal final assets for the purposes of the equalisation of accrued gains. How such a structure can in principle contribute to asset protection on a move abroad is examined in more detail in the article Family foundation as asset protection for emigrants.
The Common-Law Trust
In the Anglo-Saxon trust, the settlor transfers assets to a trustee, who holds them in a fiduciary capacity for the beneficiaries – legally, without a separate legal entity coming into existence. Here too, in the case of an irrevocable trust, the settlor formally loses the power of disposal over the assets contributed. In German legal practice, however, the classification of trusts under civil and tax law is considerably more complex than for the continental European foundation, among other reasons because the trust-typical split between legal and beneficial ownership is foreign to German law, and German courts examine in individual cases to whom the assets are in fact economically attributable.
The Foreign Holding Company
For entrepreneurs, a third variant is often added: bundling shareholdings in a foreign holding company. If operating holdings are no longer held directly but through an intermediate holding, this changes the direct allocation of the individual holdings to the entrepreneur’s private assets – with potential effects on valuation in the equalisation of accrued gains, in particular if further family members or other shareholders are brought into the holding.
The Decisive Factor: Timing
However different the three structures are in detail, a common principle applies to their effect in the event of a later divorce: what matters decisively is when the transfer takes place. A family foundation, trust or holding structure that is established and endowed well before the marriage already changes the initial assets of the future spouse – the transferred assets simply no longer belong to him at that point, irrespective of the later matrimonial property regime. If the same structure is established only during the marriage, in particular in temporal proximity to a recognisable marital crisis, the legal assessment changes fundamentally. This is where the second half of this article begins, which for advisory practice is at least as important as the structuring option itself.
The Legal Limits – and Why They Are Often Underestimated in Practice
German family law is not naive about attempts to withdraw assets from the equalisation of accrued gains by transfer to third parties or to independent pools of assets. Several provisions, operating independently of one another, ensure that a shift of assets carried out during the marriage – whether domestically or abroad – as a rule does not effectively reduce the other spouse’s claim to equalisation of accrued gains.
Section 1375(2) BGB: The Add-Back of Disloyal Reductions of Assets
The central provision is Section 1375(2) BGB. Under it, the amount by which a spouse’s assets were reduced through
- gratuitous transfers that do not correspond to a moral duty or to a consideration to be taken out of propriety,
- waste of assets, or
- acts carried out with the intention of disadvantaging the other spouse
is added to his final assets.
The transfer of assets to a family foundation, trust or holding is, in law, as a rule a gratuitous transfer – the transferor receives no equivalent consideration, only a distribution right under the statutes, the value of which regularly falls far short of the assets contributed. If such a transfer takes place during the marriage, it is arithmetically added back to the final assets of the transferring spouse – with the result that, at its core, nothing changes in the economic outcome of the equalisation of accrued gains, irrespective of whether the structure is located in Liechtenstein, the Cayman Islands or Germany. The foreign connection of the structure changes nothing about this purely arithmetical add-back, because Section 1375(2) BGB attaches to the reduction of assets of the German spouse, not to the seat of the receiving legal entity.
A rule on the burden of proof is also significant in practice: if a spouse’s assets at the time of separation are higher than when the divorce petition becomes pending, the person in whose case this difference in assets has arisen must set out and prove that it is not attributable to a disloyal reduction of assets within the meaning of Section 1375(2) BGB. In recent years the case law has refined this allocation of the burden of proof in favour of the spouse entitled to equalisation – anyone who moves larger assets abroad during an emerging marital crisis must therefore expect to have to set out, in later proceedings, plausible reasons for this that are independent of any intention to disadvantage.
Section 1365 BGB: The Consent Barrier Where Almost All Assets Are Concerned
A second hurdle, frequently overlooked in practice, applies even before the actual matrimonial property settlement: under Section 1365 BGB, while the community of accrued gains subsists, a spouse can effectively undertake to dispose of his assets as a whole only with the consent of the other spouse; without this consent, the legal transaction is provisionally ineffective. According to settled case law, this consent barrier does not apply only where literally all assets are transferred, but already where only a small fraction of them remains with the disposing spouse – in the literature, a remaining residual estate of below roughly 10 percent is cited as a guideline for larger assets, and of around 15 percent for smaller assets. These are opinions in the literature and not a fixed threshold with a secure source in case law; the individual case is always what matters. If, therefore, the vast majority of the assets of an entrepreneur or wealthy private client is contributed to a foreign foundation, trust or holding, this can, irrespective of the actual equalisation of accrued gains, already fail for lack of the spouse’s consent – with the result that the transfer must be unwound if the spouse relies on this.
Section 1375(3) BGB: The Ten-Year Cut-Off Period – No Licence for Short-Term Action
In Section 1375(3) BGB, the law provides two exceptions to the add-back under subsection 2: it does not take place if the reduction of assets occurred at least ten years before the end of the matrimonial property regime, or if the other spouse consented to the gratuitous transfer. This rule is misunderstood in some advisory discussions as if it were a plannable shortcut: one need only make an asset transfer early enough, and the risk of add-back would then “lapse”. That is true as a tendency, but in practice it means that a transfer must have taken place at least a decade before a divorce, without it having been foreseeable at that time what it actually serves – advance planning over time that has nothing more to do with a current or foreseeable marital crisis and, in law, in any case concerns only the family-law add-back, not the creditor-protecting avoidance described in the next section.
The Second Front: Avoidance Under the Avoidance Act
Even if a shift of assets is captured arithmetically under family law via Section 1375(2) BGB, a practical problem remains: this add-back initially only increases the other spouse’s claim to equalisation of accrued gains – it does not automatically bring the transferred assets back. If the person liable to equalise is, after the transfer, no longer liquid enough actually to satisfy the (arithmetically increased) claim to equalisation, the spouse entitled to equalisation becomes, with an enforceable claim, a creditor within the meaning of the Avoidance Act (Anfechtungsgesetz, AnfG) – and can contest the underlying transfer of assets independently.
Section 4 AnfG applies here in particular: a gratuitous performance by the debtor can be contested provided it was made no more than four years before the contest – without any intention to disadvantage being required. Since the endowment of a family foundation or trust is typically gratuitous from a civil-law perspective, this comparatively sharp, fault-independent right of avoidance frequently applies in practice. In addition, Section 3 AnfG, where an intention to disadvantage is proven, even opens a right of avoidance for a period of ten years if the recipient of the transfer – for example the trustee or the foundation board – knew or should have known of this intention. These rights of avoidance, too, are independent of the seat of the beneficiary structure; their actual enforcement abroad can, however, depending on the country and its recognition of German titles, prove factually considerably more difficult than domestically.
What Geographical Distance Actually Achieves – and What It Does Not
This distinction is central to advice: moving assets abroad, as a rule, does not change the substantive legal position – the claim to equalisation of accrued gains continues to exist arithmetically unchanged, and the spouse’s right of avoidance also remains. What a foreign structure actually changes is the factual enforceability: a German judgment must be recognised and declared enforceable in the state where the structure was established, which, depending on the country, its trust or foundation law and any bilateral agreements, can be protracted, costly and uncertain in its result. This factual impediment to enforcement is the real, often unspoken core of the structuring idea – in law it is to be clearly distinguished from an actual reduction of the claim, and it changes nothing about the fact that the underlying shift of assets can remain unlawful and contestable under German law.
Tax Look-Through Instead of Tax Flight
Anyone who sets up a foreign family foundation or a trust should also not overlook that these structures are regularly not tax-shielded: for non-transparent foreign family foundations and trusts, attribution taxation applies under the conditions of Section 15 AStG (German Foreign Tax Act), under which the foundation’s or trust’s assets and their income can continue to be attributed personally to the German founder or beneficiary. A foreign structure set up primarily with the aim of concealing assets therefore regularly provides neither a robust advantage under family law nor a tax advantage – it primarily creates additional advisory and compliance effort.
Table: Structuring and Risk at a Glance
← Tabelle nach links wischen, um weitere Spalten zu sehen
| Aspect | In good time before the marriage / well before any crisis | During the marriage / close to a crisis |
|---|---|---|
| Effect on initial assets | Transferred assets do not count towards initial assets | No effect – the assets already formed part of the initial assets |
| Section 1375(2) BGB (add-back) | In principle not applicable | Regularly applicable, irrespective of the seat of the structure |
| Section 1365 BGB (consent requirement) | To be examined where almost all assets are concerned | To be examined, with heightened potential for dispute |
| Avoidance under Sections 3, 4 AnfG | Regularly time-barred after expiry of the periods | Often still within the periods for avoidance |
| Attribution taxation Section 15 AStG | To be examined in the individual case | To be examined in the individual case |
| Factual enforceability abroad | Regularly not an issue in law, as the claim never arises | Claim continues to exist; enforcement abroad may be impeded |
The Serious Alternative: Transparent Arrangement Instead of Concealing Assets
Anyone who wants to organise their assets in a legally secure way and without the risk of avoidance and add-back described has, in Germany, a recognised, considerably lower-risk instrument at their disposal: the notarised marriage contract. By way of an individual separation of property or a modified community of accrued gains, individual assets – such as business holdings, foundation assets or certain properties – can be removed from the equalisation of accrued gains by agreement and with the knowledge of both spouses. Unlike a covert shift of assets, such a contractual arrangement has binding effect precisely because it is made openly, with the consent of the other spouse and without any intention to disadvantage; it is itself subject to judicial review for validity and immorality, but is in principle not exposed to the avoidance risk under the AnfG or to the add-back under Section 1375(2) BGB. Practical structuring approaches on this can be found in the article Structuring tips for marriage contracts, settlement of accrued gains and maintenance (in German). A related arrangement, also legal but to be accompanied critically in advisory practice, is the so-called Güterstandsschaukel (“matrimonial property see-saw”), in which spouses, during the marriage, first switch to separation of property and then back to the community of accrued gains, in order to equalise tax-free an accrued gain that has arisen in the meantime – here too, the line between permissible structuring and abusive application is narrow, as the article Small or large Güterstandsschaukel for asset protection (in German) shows in detail.
Foreign structures such as a family foundation, trust or holding nevertheless remain sensible instruments – but primarily for their actual purposes: cross-generational succession planning, protection against entrepreneurial liability risks, or international tax planning on a move abroad. If they are established in good time, that is, well before marriage or recognisably detached from any specific marital crisis, and with a comprehensible, documented motivation, they can, as a side effect, actually have an effect under matrimonial property law. If, on the other hand, the same structure is recognisably established as a reaction to an emerging divorce, it comes largely to nothing in law – and in addition creates the risk of a court dispute about the effectiveness of the transfer itself.
Conclusion
A foreign structure does not protect assets against a future equalisation of accrued gains automatically simply because it is located abroad. What is decisive is whether the transfer takes place so early and so transparently that it is neither caught by Section 1375(2) BGB as a disloyal reduction of assets nor contestable under Sections 3, 4 AnfG, and does not fail on the consent barrier of Section 1365 BGB. Anyone who knows these limits and plans their succession and business structure early enough accordingly can seriously embed a family foundation, a trust or a holding company in comprehensive asset and provision planning. Anyone who acts only in the face of a marital crisis, on the other hand, should be aware of the considerable legal risks – and, in the event of later court proceedings, personal risks – of such a shift of assets.
This article serves general information purposes and does not replace legal advice in an individual case.
Attorney Dr. Johannes Fiala and the firm, with a focus on international tax, corporate and asset law in Munich, advise entrepreneurs and wealthy private individuals on the legally secure structuring of foreign structures in the context of succession and asset planning – including the family-law limits to be observed in the event of a possible future divorce. Contact the firm without obligation to discuss your asset and succession planning in an initial consultation.
