Divorce is relatively common in Switzerland. Statistics from the Federal Statistical Office show that around 17,000 divorces are carried out annually, on average. But in spite of its popularity, many people are not fully aware of how divorce impacts them financially.
Here, moneyland.ch answers some of the most important questions about divorce and how it affects your wallet.
1. What happens to my assets when I divorce?
That depends on whether or not you have created a marital agreement. In the default matrimonial property regime (you have no marital agreement), property and assets held by each person ahead of getting married remains their property after divorce. Inheritances and gifts received by one spouse during the marriage remain in that spouse's possession after divorce. All other assets acquired during your marriage are divided equally between both parties.
If dividing your assets with your ex-spouse is not an option, consider creating a notarized marital agreement prior to divorcing which specifies another marital property regime.
2. How does divorce affect my taxes?
Divorce has far reaching effects on taxes. As a single person, the tax bracket you are placed in depends on your personal income. As a married couple, the tax bracket you are placed in depends on your combined income.
If you both earned a decent income prior to divorcing, you can expect to pay lower taxes after you divorce because only your own income will be used to determine your tax bracket, rather than your combined income. If only one of you worked, or if both of you worked but your spouse earned a low income, you can expect your tax bill to increase because you no longer have your spouse's low income to balance your higher income. If, on the other hand, you earn a low income and your spouse earns a high income, you can expect be placed in a lower tax bracket after your divorce.
Child support payments you make can be deducted from your taxable income. The spouse or (grown) child who receives the child support must declare it as income.
Tax laws vary broadly between cantons, so the extent to which your taxes are affected by divorce depends on which part of Switzerland you reside in.
3. What happens to my social security contributions when I divorce?
When two people are married for more than one year, contributions paid into old-age insurance and disability insurance from social security during their marriage are split between them. When you divorce, you and your spouse keep your share of the social security savings which you tucked away throughout your marriage. You will have to request the separation of your social security assets as soon as the divorce process has begun. Social security assets are split regardless of marital agreements stipulating separate estates.
Old age pension: After you divorce, you will be eligible to receive a full social security old age pension, without the 25% penalty which applies to married individuals. However, you may need to fill gaps in your old-age insurance by making voluntary contributions.
Disability pension: If divorcing leads to your disability pension being radically reduced – as may be the case if you are young and have not yet contributed a lot of money to social security – you should consider taking out private disability insurance to fill the gap until you rebuild your social security savings.
Survivors pension: Divorced women are still entitled to receive a survivors pension in the event that their ex-husband dies if they turn 45 years old before their youngest child turns 18 years old or if the marriage lasted at least 10 years and: they were older than 45 years old at the time of divorce; they have children. Divorced women who have children but do not meet these criteria - because the marriage lasted less than 10 years or they are younger than 45, for example - can receive a survivors pension, but only until their youngest child turns 18 years old.
Divorced men are entitled to a survivors pension in the event that their ex-wife dies if they have children under 18 years old. They receive this pension until their youngest child's eighteenth birthday.
4. Is my occupational pension fund (2a) affected?
The retirement savings which you have contributed to your employers’ pension funds during your marriage are added together and the total is then split evenly. This occurs even if you have a marital agreement which eliminates joint property.
Splitting your pension assets with your spouse may create large gaps in your pension. You can close up gaps in your pension fund by making voluntary contributions in keeping with your pension fund’s regulations.
If you are not employed, you will have to place your share of the pension savings in a vested benefits account (compare vested benefits accounts here) or a vested benefits life insurance policy.
5. What happens to my 3a retirement savings?
Your 3a retirement savings are treated exactly the same as your regular private savings. 3a assets which you contributed before getting married remain in your possession, as do 3a contributions made up of gifts or inheritances which you received during marriage. All other 3a retirement savings are divided equally between both spouses.
Assets must remain in a 3a savings solution, so if you do not have your own 3a account, fund or insurance policy, you will have to open one. You can find the right account using the 3a retirement account comparison on moneyland.ch. An alternative is to use your 3a assets to close gaps in your 2a pension fund.
6. Alimony and child support
In Switzerland, you are not normally required to pay alimony to your former spouse over the long term. However, if you were married for many years, or if your spouse has poor prospects of earning a living on their own, you may be required to support them financially for a time.
If you have children together, you must continue supporting your children after divorcing. Your obligation to support your children financially only expires after your children complete an initial education which enables them to earn their own living or when they reach legal adulthood.
The size of alimony and child support payments is decided by a court of law based on cantonal guidelines. If children live with one parent, that parent is not required to pay child support. If your income is lower than the cantonal “minimum subsistence” level, you will not normally be obligated to pay child support.
7. Am I still entitled to an inheritance?
After you divorce, you no longer have any claim to an inheritance from your ex-spouse. The reason for this is that you receive your share of retirement assets and joint property when you divorce. Children remain legally entitled to their compulsory share of inheritances after their parents divorce.
8. Who pays the legal expenses?
In regular divorce cases, both spouses must cover equal shares of legal expenses. Court fees can easily add up to several thousand francs. Lawyer consultation fees are typically several hundred francs per hour. Unfortunately, legal insurance does not normally cover divorce-related expenses.
Some legal insurance policies do cover the cost of legal consultation with regards to marital law, and this can save you a lot of money during legal proceeding leading up to divorce. You can find these policies by selecting the “Marital law” filter under “Legal advisory protection coverage” in the moneyland.ch legal protection insurance comparison.