What Is A Matrimonial Property Regime (MPR) And Why Do I Need To Know About Them?
Many UK solicitors are not familiar with matrimonial property regimes (MPRs) as it’s not something that we encounter within UK law.
However, MPRs are a fundamental part of law in many other countries, so when dealing with clients with overseas connections, it’s something that UK solicitors should be aware of, especially when it comes to succession planning, wills, probate and divorce.
Sara Janion, Director of Worldwide Lawyers – a UK-based company, which connects UK solicitors and legal practitioners to independent lawyers across the world – and Notary Public of England and Wales, explains what MPRs are and why it’s important for UK solicitors to be aware of them.
What is a Matrimonial Property Regime (MPR)
Sara says: “A matrimonial property regime (MPR) is a contract, which is entered into between spouses that sets out what happens regarding the ownership of the couples’ assets on death or divorce. In some cases, they can also be applied to civil partnerships.
“In the same way that the rights of survivorship apply when assets are held as joint tenants in the UK, the relevant regime usually takes effect before any assets devolve under a will. This is why it’s important to know whether there is an existing MPR before preparing a will or dealing with an estate administration for foreign clients or clients who have links to other countries.
“There are three main types of regimes: separation of property (similar to tenancy in common); universal community of property (similar to joint tenancy); a combination of the two.”
“MPRs are usually entered into at the point of marriage and a ‘default’ regime will apply, unless they choose to select an alternative regime. It also possible for two or more regimes to exist with regards to assets in different countries and specific assets.
Who do MPRs apply to and when do they take effect?
Sara comments: “Matrimonial property regimes are the statutory default procedure in many civil-law and bi-juridical jurisdictions, which is why it’s necessary to check with foreign clients or clients who have links to other countries whether there is an existing MPR. So, for instance if your client is was not born in the UK, owns assets outside of the UK, got married abroad or is considered domiciled abroad, it’s worth checking whether there is an existing MPR in place.
“It’s also possible for MPRs to be entered into or changed after marriage. For example, many British citizens who have bought property abroad have entered into a particular MPR to structure their joint ownership in a way that avoids the forced heirship rules of the country where the property is located.
“Often the client, may not be fully aware that there is a MPR in place or know exactly the effect this has. It can therefore be helpful to check the deeds to any foreign property to see if this provides any evidence of an MPR.”
In January 2019, new legislation which affects EU matrimonial property regimes came into play, in order to harmonise the application of MPRs and CPRs across signatory states. There are currently 18 signatory states (‘member states’): Austria; Belgium; Bulgaria; Croatia; Cyprus; Czech Republic; France; Finland; Germany; Greece; Italy; Luxembourg; Malta; Portugal; Slovenia; Spain; Sweden and The Netherlands.
However, other some other EU/EEA countries (Estonia; Denmark; Hungary; Ireland; Latvia; Lithuania; Poland; Romania; Slovakia and the UK), have not signed up at this stage.
Nonetheless, UK nationals can be affected by this legislation if they own assets in signatory jurisdictions and an MPR applies to them, their spouse or both.
Why do UK lawyers need to understand MPRs?
Sara explains: “Many foreign lawyers find our unfamiliarity with the concept of MPR difficult to understand, as they are one of the building blocks of inheritance procedures in many foreign countries. They are one of the main reasons that wills are not as common in civil law jurisdictions.
“Although MPRs are not a concept within UK law, as well as British nationals potentially being affected by them in the reasons mentioned above, they can also apply to movable assets under the law of English and Wales.
“When it comes to distributing assets from an estate, an MPR precedes a will which means that if a UK solicitor did not take into account an MPR with regards to succession, it could mean that the assets were distributed incorrectly. So, it’s crucial to understand whether there is an MPR in place before distributing any assets from an estate.
“Furthermore, when assisting clients with estate-planning you need to be aware beforehand whether an MPR applies to ensure you give them the best possible advice. An MPR can also be a very effective estate planning tool for clients with assets in foreign jurisdictions when used correctly”.