Generally speaking, marriage means a combination of two people’s lives, including their assets. Let’s see what the Civil Code of the PRC (hereinafter “Civil Code”) says regarding the estate of couples.
I. What is a joint estate?
According to the Civil Code, the following estate acquired by a husband or wife during the marriage will be treated as joint estate, if it’s not provided by the couple otherwise.
a. Remuneration for labor services, such as salary and bonuses;
b. Proceeds of business operation, investment or intellectual property rights;
Of course, the moral right of any intellectual property rights belongs only to that specific person. However, the couple instead of just the husband or wife will be the owner of any investment in security or fund, or any equity share in a company, even if only the husband or wife is the shareholder listed in the company registration agency and he/she is the only one who operates this business.
c. Property inherited or donated, unless it’s been made clear that the property only belongs to the inheritor or the beneficiary by the deceased or donor.
A common example is, if one set of parents paid for the real estate (wholly/partly), unless they clearly stated that the payment is a gift only to their son or daughter, the payment they made will be treated as a gift to the couple and thus, a joint estate.
Another common example is, if the husband or wife inherited a real estate in line with the law, the inherited real estate will be deemed as a joint estate, unless his/her parents made it clear in the will that only their son/daughter will inherit the real estate.
e. Other property which should be treated as joint estate.
It is provided by the Civil Code that the husband and wife has equal right to dispose the joint estate, regardless of how much revenue the husband or wife brings to the family.
II. What is a personal estate?
Despite the above mentioned provisions, the Civil Code acknowledges the existence of personal estate and provides that the following estates are personal estates：
a. All personal property before the marriage;
b. Financial compensation obtained by the husband or wife for a personal injury;
c. Property inherited or donated during the marriage, and the deceased or donor had determined that only the husband or the wife is the inheritor or beneficiary;
d. One party’s daily necessities (such as the items one uses in his daily life or job, e.g., laptop, books, clothes and jewelry etc.; and
e. Other property which should be treated as personal estate.
III. What about a joint debt?
Debts incurred jointly by the couple are joint debts. Further, any debts incurred by the husband or wife, if it’s acknowledged by the other party or if the purpose of the debts is to meet the needs of the family’s daily life then such shall be deemed as joint debts.
However, any debt incurred by either spouse in his or her own name, and the amount of the debt goes beyond what is needed for the family’s daily life shall not be deemed as a joint debt.
Moreover, any debt incurred through gambling or due to drugs is not a joint debt.
IV. Is a property agreement during the marriage valid and enforceable?
Despite the above mentioned provisions, the couple can sign a property agreement to stipulate how to manage all estates during the marriage. Examples of property agreements:
- All estates before or during the marriage belong to the person who owns or earns them,
- All estate before or during the marriage belong to the couple jointly, or
- Part of the estate is owned by the couple jointly while the other part of the estate belongs only to the husband or wife.
Though the property agreement is binding to the couple, it won’t be binding to any third party, such as the creditor to the husband or wife, unless the creditor knows the existence of such property agreement in advance.
Why so?
Usually, people assume that either husband or wife is a member of the family. The reason they agree to lend money to the husband or wife, is that they assume the family (not just the husband or wife) has the capability to pay it back. The property agreement between the couple is something people are usually unaware of, either the existence of it or its content. So it’s unfair to the creditor if the couple refuses to return the money by using the property agreement as a defense and the court won’t be in favor of this argument.
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You may visit the website of Ministry of Civil Affairs of the People’s Republic of China to know more information
