Newsletter
Family Business Succession Planning and Family Matters Series-Major Amendment to Article 1030-1 of the Civil Code Regarding the Right to Claim for Distribution of the Remainder of the Property
1. Preface
Persons who have a marriage relationship are subject to the matrimonial property regime (in particular, the statutory regime). On 30 December 2020, the Legislative Yuan passed the amendment to the right to claim for distribution of the remainder of the property under the statutory regime (Article 1030-1 of the Civil Code), which was promulgated by the Presidential Order on 20 January 2021. Such amendment has been extensively reported by the media and aroused concern in the society. Therefore, this article gives a brief introduction on the the current statutory provision of and the latest amendment to the right to claim for distribution of the remainder of the property.
II. A brief introduction on the current provision regarding the right to claim for distribution of the reminder of the property and on the latest amendment
(1) The provision about the right to claim for distribution of the reminder of the property under the current Civil Code
Article 1030-1 of the current Civil Code provides that: "Upon dissolution of the statutory regime, the remainder of the property acquired by the husband or wife in marriage, after deducting the debts incurred during the continuance of the marriage relationship, if any, shall be equally distributed to the husband and the wife, except property listed as follows: 1. Property acquired from succession or as a gift; and 2. Solatium (paragraph 1). The court may adjust or waive the share of distribution provided that equal distribution referred to in the preceding paragraph is obviously unfair (paragraph 2). The claim referred to in the first paragraph may not be assigned to others or be passed to heirs, unless it has been acknowledged by a contract or an action has been commenced (paragraph 3). The right to claim for distribution of the reminder of the property referred to in the first paragraph shall be extinguished if it is not exercised within two years from the date where the claimant has known such remainder, or if five years have elapsed from the dissolution of the statutory regime (paragraph 4)." Regarding this provision, please bear in mind the following issues: First of all, only the difference between the property acquired in marriage by the husband and by the wife may serve as the subject matter to be distributed; thus, a clear distinction between pre-marital property and post-marital property is crucial (see Article 1030-2 of the Civil Code). Second, property gains, which are not related to the common living in marriage such as property acquired from inheritance or as a gift and solatium, are not the subject of equal distribution, either. Only the party with the lesser property acquired after marriage may request from the other party who has more property acquired after marriage (but it is unnecessary to know the exact amount of the property). Furthermore, if the "equal distribution is obviously unfair", the court may adjust or exempt the distribution. Finally, there is a provision about the extinguishing of the claim right.
If the husband or the wife, in order to reduce the other's share of distribution of the remainder of the property, disposed his or her property acquired in marriage within five years before the termination of the relationship over the statutory regime, to prevent the claim from being affected by the other party in bad faith, this property shall be counted into and deemed as the remainder acquired in marriage (see Article 1030-3 of the Civil Code). Where the husband's or the wife's gratuitous act on his or her property acquired in marriage during the continuance of the marriage relationship endangers the other's right to claim for distribution of the remainder upon the termination of the relationship over the statutory regime, the other party may apply to the court for its annulment under certain circumstances (see Article 1020-1 of the Civil Code).
In practice, it shall be noted that Article 1030-1 of the Civil Code came into effect on 5 June 1985. However, the Judicial Yuan's Constitutional Court Interpretation No. 620 has confirmed that: Regardless of whether the post-marital property was acquired before or after 5 June 1985, either of which falls under the calculation scope of the right to claim for distribution of the remainder of the property. Besides, since the right to claim for distribution of the remaining property of the spouse is often exercised by the other party when his/her spouse passes away, this right is sometimes confused with the right of inheritance. Nevertheless, the Supreme Court has already clarified this issue in several decisions. According to these decisions, the right to claim for distribution of the remaining property and the right to inheritance of the surviving spouse to the first deceased spouse are two separate issues; in other words, they are different, separate, and independent claims.
(2) A brief introduction on the amendment to Article 1030-1 of the Civil Code passed by the Legislative Yuan in 2020.
As stated above, Paragraph 2 of Article 1030-1 of the previous Civil Code previously provides for that: "The court may adjust or waive the share of distribution provided that equal distribution referred to in the preceding paragraph is obviously unfair." Regarding the expression "being obviously unfair", many examples are found in the practice of court decisions. For example, if one of the spouses is fooling around or is prodigal, thus having no contribution to the accumulation or increase of their property, then there is no proper basis for this spouse to participate in the distribution of the remaining property, and he or she shall not be allowed to be a free rider by obtaining the benefits that he/she should not have received (see the Supreme Court's Civil Decision No. 100-Tai-Shang-Zi-2031). Where any of the spouses no longer provides family care and career assistance after their separation, the court has also decided to reduce the distribution (the Supreme Court's Civil Ruling No. 102-Tai-Shang-Zi-2020).
In the amendment passed by the Legislative Yuan's third reading on 30 December 2020, which amends Paragraphs 2 and 3 of Article 1030-1 of the Civil Code, it expressly provides that in considering if the distribution of the remainder of property according to the claim right is fair, the court must, by referring to legal imperatives such as the "household labor during the continuation of the marriage, child care and raising, overall assistance for the family, length of time for common living and separation, time of acquisition of property after marriage, and financial ability of both parties", make for individual case the criteria formed by the court's long-standing practices about "being obviously unfair", which criteria are directly included in the statutory provisions. However, in the past, the court used to have discretionary power to consider if the case about the right to claim for distribution of the remaining property is "obviously unfair." Is the court, after this amendment, still able to consider circumstances other than legal imperatives? We believe that a positive view should be taken. Otherwise, suppose one of the spouses deliberately does superficial work only in respect of the legal requirements listed in the provision, it would be apt to result in unfair situations.
At the end, it should be noted that in review of this amendment, the Legislative Affairs Committee of the Legislative Yuan discussed whether the provision about the interests or proceeds incurred from "the property acquired before marriage" of the spouses during the marriage relationship which are considered "the property acquired in marriage" under Paragraph 2 of Article 1017 of the current Civil Code should be amended or not. This provision remains unchanged after such discussion. It is, however, believed that as Paragraph 2 of Article 1017 of the current Civil Code is inconsistent with the other provisions for the right to claim for distribution of the remainder of the property and has resulted in practical difficulties, and so it is worthy of further discussion if any amendment will be made in the future.