Berglind Svavarsdóttir, attorney at Reykjavík Law Firm, answers questions from Smartland readers. Here she gets a question from
Hi Berglind.
When a spouse has received accident compensation and contributes part of it to a down payment on a car and caravan, is it classified under matrimonial law? or private property? Now the spouse has invested quite a bit of this money in running the household, such as paying off some of the debts and buying a car where he put two million as a down payment, and then the couple took out a joint car loan for the rest, which they both paid off. The two million that went into a down payment on the car, how are they classified? Does the car have to be sold if the spouse wants to get the two million back?
Regards,
G
Hello G.
A couple’s assets are divided into matrimonial assets and separate assets, which can be contractual or statutory. The main principle in matrimonial law is that property owned or acquired by a couple during marriage becomes marital property and is generally divided in half upon death or divorce.
If a couple wants to have it the other way around, a deal must be made where assets are made separate assets. According to Article 102 Marriage Act no. 31/1993, the spouse can demand that various financial benefits, incl. accident benefits, will not be exchanged upon divorce, provided that those values are still present on the reference date of exchange and will be separately identified cf. also paragraph 3 Article 18 Compensation Act no. 50/1993.
If it were possible to prove that the origin of the two million ISK contribution to the purchase of a car was accident compensation, it would presumably be possible to demand that that sum be excluded. Then, depending on the property and debt situation of the estate, how the assets would be finally divided between the parties and whether it would be necessary to sell assets to equalize the division.
Regards,
Berglind Svavarsdóttir, lawyer.
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