What is the difference between a marriage contract and a property division agreement, and which instrument should you choose?

Thus, a marriage contract is broader in scope than a property division agreement and also makes it possible to establish a property regime for assets that are only planned to be acquired (for example, if at the moment the spouses have accounts only in one bank, but understand that in the future accounts may be opened in other banks, including foreign ones, then a marriage contract allows this situation to be described using a general formulation, which helps protect the spouses' interests. In the case of a property division agreement, the existing accounts would need to be expressly identified). The key difference between these instruments is that after the dissolution of marriage, only a property division agreement may be concluded.

Previously, a significant feature of a property division agreement was the tax burden on a spouse receiving cash compensation due to an unequal division of property after the dissolution of marriage. Such compensation was treated as income and was taxable.

Please note that, pursuant to the Letter of the Ministry of Finance of Russia dated 16.07.2024 No. 03-04-05/66321, changes have been introduced. Now, when spouses (former spouses) conclude an agreement on the division of property that was under their joint ownership, the spouses (former spouses) do not derive income subject to personal income tax.

The Alpine Tax team is ready to provide you with detailed advice on choosing the optimal instrument for dividing property in accordance with your needs, as well as to provide full support in notarizing these documents.