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Financial Relationships between Spouses Law

Financial Relationships between Spouses Law, 5733-1973

In 1973, the Financial Relationships between Spouses Law was legislated.  The Law created significant changes concerning division of property between spouses in the event of a divorce or the dissolution of couple relations.  So what does the Law state?  Which changes did it create?  How is the Law expressed in divorce proceedings?  Details of the Law’s effect are described herewith.

Financial Relationships between Spouses Law

In 1973, the Financial Relationships between Spouses Law was legislated.  The Law created significant changes concerning division of property between spouses in the event of a divorce or the dissolution of couple relations.  So what does the Law state?  Which changes did it create?  How is the Law expressed in divorce proceedings?  Details of the Law’s effect appear below.

The legal nature of joint ownership

Prior to the enactment of the Financial Relationships between Spouses Law, a couple’s property was divided based on the existing law relating to joint ownership.  That law stated that all property accumulated during the couple’s married life belongs equally to both spouses.  Such partnership of ownership was based on the fact that each spouse contributed the best of his/her strength and resources to building the couple relationship.  Even if one side brought more money and property to the relationship, the other couple contributed in other ways that include managing the household, caring for the children, and so forth.

Such joint ownership also applied to property registered solely in the name of one of the spouses.  As an example, even if a property acquired during the couple’s shared life was registered in the husband’s name, it also belonged to the wife by virtue of the understanding that there was intention to share its ownership—even if the wife was not listed as an owner.  In order for a particular property to be removed from joint ownership it must be proven that there was in fact no intention to include it in the couple’s joint property.  The burden of proof was on the party requesting the exclusion of such property from the joint o`wnership law, and not on the party claiming that a particular property was to be jointly owned.

A property that arrived from outside the couple relationship with no connection to the couple—an inheritance, gift from relatives to one of the spouses and the like—is not automatically considered to be jointly owned; however it might be considered as such in certain cases.  In such cases proof must be supplied that there was intention for the property to be shared, i.e., the burden of proof is on the party requesting to apply joint ownership to the property.

Balancing resources: new aspects resulting from the Law

The Financial Relationships between Spouses Law was meant to regulate the division of property via legislation and replace the previous joint ownership law that constituted the legal basis for rulings in this domain.  Although the Law is indeed based on the previous notion of joint ownership, at the same time it departs from it.  The Financial Relationships between Spouses Law brought about several significant changes in matters concerning division of property.

  • The Law in fact nullifies the previous nature of joint ownership – Property accumulated during married life is not jointly owned—it belongs to the person who accumulated it.  Nevertheless, property accumulated during married life, irrespective of the question of its ownership, must be divided equally between the spouses due to their invested efforts in building their shared life together.
  • Division of property may begin only upon the nullity of the marriage.  It may not be divided so long as the couple is still married or living together as a couple.

The Law states that in the case of a divorce, a calculation must be made of the value of all assets belonging to each side.  After this, a comparison will be made between the value of the assets belonging to the spouses.  The spouse owning a greater value of assets will pay one-half of the difference to the other side.  This results in each of the sides emerging from the divorce owning one-half of the total value of assets owned by the sides.

There are a number of exceptions that are not included in the resource-balancing calculation:

  • Property that was owned by one of the sides prior to the marriage.
  • Property received as an inheritance or a gift.
  • Allowances and compensations received due to injury or sickness.
  • Assets previously agreed upon by the sides not to be included in the balancing of resources—hence the importance of a prenuptial financial agreement that determines what will be included and what will be excluded in the arrangement for balancing resources.

Another important point the Law addresses is that “all assets of the couple” which are to be divided shall also include “future pension rights, retirement compensation, study funds, provident funds and savings.”  Therefore, the process of balancing resources also includes a calculation of such assets and dividing them proportionally according to the length of the marriage.

It is important to remember that balancing resources occurs only if the spouses have not arrived at an agreement concerning division of property.  If the spouses succeed in formulating a financial agreement by themselves, and the agreement is certified by the court, then it is their agreement that determines the division of property.

The Financial Relationships between Spouses Law: Amendment from 2008 – dividing property prior to awarding of the get [Jewish divorce]  

The Financial Relationships between Spouses Law resulted in a problem that created difficulties for many women in the process of divorcing.  The Law stated that division of property should occur only after the nullity of the marriage, i.e., only after the woman received a Jewish divorce and the marriage ended in accordance with Jewish halacha.  This requirement led to many cases in which the husband profited from the possibility of extorting his wife—by refusing to grant a Jewish divorce and thus delaying not only the divorce, but also the division of property.  In such cases the woman was forced to ‘pay’ the husband to grant a Jewish divorce by foregoing claims on property and rights.  In the meantime, the husband had been holding the property up to that time; therefore the woman had no resources of her own so long as she wasn’t granted a Jewish divorce.  For these reasons she was in an inferior position in relation to the man.

In response to the above problem an amendment to the Law was enacted, stating that property may be divided even prior to the divorce, thus severing the link that existed between nullity of the marriage and division of property.  According to the amendment, property could be divided before the nullity of the marriage if a request was filed for balancing resources, on condition one of the following conditions was fulfilled:

  • Less than one year had elapsed since one of the following steps was taken:
    • A request for dissolving the marriage was filed or another step taken showing clearly that the spouses, or a spouse, was requesting to end the marriage (or their couple relations).
    • A suit (or similar legal step) was filed for dividing property or dissolving the couple’s partnership in joint property.
  • The spouses had been living apart more than nine months; or, if they had still been living together, there has been a definite rift between them during that period.  

In special cases a court of law is authorized to decide that division of property is a discussable issue even if the above time period has not elapsed, for instance in cases of violence between the spouses.  In order for the side requesting early division of property to show seriousness of intent, the court may demand receiving a written agreement for dissolving the marriage.

Not only for divorcing couples: Who does the Law affect?

The Law legislated in 1973 concerns couples that married after January 1, 1974.  The previously described rule of shared property still applied to couples married before that date.

The Law discusses division of property in the event of the “expiry of couple relations”, in other words the ending of the spouses’ couple relationship.  Unfortunately, there is more than one way for couple relations to end, i.e., divorce of the death of a spouse.  The Law also concerns common law couples that live as a couple and have legally recognized status in the event that they separate, even if not through a divorce.

Not a simple law

Because the Property Relationship between Couples Law deals with a sensitive subject (divorce, dissolution of the family unit, a fight between family relatives and so on) and is also a complicated process (money and property are always complicated), its application is not simple.  Numerous issues constitute grounds for lengthy deliberations, inside and outside the court—for instance which assets are to be divided, how to calculate their value, what to do with a joint apartment, what to do about debts and potential future benefits, and other issues that one can imagine.  Therefore it is important to consult with a divorce attorney before commencing the process and closely cooperate in legal actions, relying on the attorney’s accumulated knowledge and experience.