Marital Property Contract (Estonia)

A marital property contract is a practical legal instrument that facilitates divorce proceedings, reduces potential conflicts, and helps prevent litigation regarding property division. A key advantage is that such an agreement may also govern the division of property and assets outside Estonia.

The contract may be concluded either before or during the marriage and outlines the parties’ property rights and obligations, both during the marriage and in the event of its dissolution.

By mutual agreement, spouses may choose a proprietary relations regime as provided by the Family Law Act, either prior to or during the marriage, and may make a formal declaration to that effect. This declaration shall take effect upon the conclusion of the marriage.

If the spouses do not select a proprietary relations regime and no marriage contract is concluded, the statutory regime of joint property shall apply from the date of marriage (Family Law Act § 24(2)).

However, if the spouses both select the regime in their marriage application and enter into a marital property contract, the terms of the contract shall govern their property relations (Family Law Act § 24(3)).

Purpose and Legal Basis for a Marital Property Contract

Where spouses are permitted to select a proprietary relations regime upon marriage, the question arises: what is the legal utility and justification for entering into a marital property contract?

1. Property Distribution: The contract may define not only the general property regime (joint or separate ownership), but also specify individual items or categories of property, proprietary rights, and obligations that shall be considered joint or separate (Family Law Act § 27(4)).

2. Management of Separate Property: The contract may provide that no restrictions apply to the disposal of separate property — i.e., property and assets acquired by one spouse before marriage and not subject to joint ownership (Family Law Act § 271(4)).

3. Asset Management: The contract may provide that one spouse does not require the consent of the other to conclude transactions in the course of their own business or economic activity (Family Law Act § 29(2)).

Generally, jointly acquired property used as the family residence may only be disposed of with the consent of the other spouse. The marriage contract may provide that such restrictions do not apply (Family Law Act § 41(5)).

4. Defining Joint Property: The contract may provide for a method of calculating and accounting for joint property that differs from the default rules of the Family Law Act (Family Law Act § 49(4)).

Termination of the Marital Property Contract

A marriage contract terminates:

1. Upon the death of one of the spouses or dissolution of the marriage.
2. Upon the conclusion of a new marriage contract establishing a different matrimonial property regime.
3. By court order, where joint ownership or gain-sharing is terminated upon the claim of one spouse (Family Law Act § 62).

According to the law and prevailing case law, spouses may not retroactively revoke a marriage contract. Under § 59(1)(1) and § 62(2) of the Family Law Act, the only lawful method of terminating a prior marriage contract is by executing a new one. Therefore, spouses cannot agree that their contract was never in force.

The law also does not permit spouses to retroactively cancel a property division agreement in such a way that the property becomes joint once again. The Civil Chamber of the Supreme Court has affirmed that the Family Law Act aims to ensure clear and stable property relations between spouses, which are easily identifiable by third parties and may not be altered retroactively (RKTKo No. 3-2-1-36-13, para. 12).

Role of the Marriage Contract in Divorce

1. Prevention of Property Disputes: The primary advantage of a marriage contract is the clear allocation of property rights and obligations, thereby preventing drawn-out court proceedings.
2. Cost and Time Efficiency: Divorce proceedings often entail legal fees and procedural costs. A marriage contract can significantly reduce these expenses.
3. Protection of Both Parties’ Interests: The contract serves to ensure fairness between the parties. For instance, a spouse may retain ownership of a pre-marital business or avoid liability for debts incurred by the other spouse.
4. Indirect Protection of Children’s Interests: While a marriage contract cannot directly regulate matters such as custody or child maintenance, it may indirectly protect the interests of children. For example, it may stipulate that the family home is retained by the parent with whom the children reside or that a portion of one parent’s income is allocated for child support. This can reduce both emotional and financial burdens following a divorce.

Legal Limitations and Considerations

Under Estonian and broader European law, this kind of contract may not regulate personal (non-proprietary) matters, including moral behavior such as fidelity. Clauses such as "in case of infidelity, one spouse forfeits rights to joint property" are contrary to public policy and may be declared void.

This differs from U.S. jurisdictions, where such provisions may be valid under state law, although typically subject to strict conditions. It is important to note that U.S. family law operates under a common law system, with significant variation between states.

Notarial Form and Applicability

Marital Property contracts must be concluded in person by the spouses and executed in  notarial form. The contract may also apply to assets located outside Estonia.

If you are planning to marry in Estonia, or are already in a marital relationship, it is advisable to consider entering into a marital property contract as a legal means of securing your property and family relations.