Under the regime of community of acquisitions, as set out in Article 1724 of the Civil Code, the common property of the couple includes the income from the spouses’ work and the assets acquired by them during the marriage, unless specifically excluded by law.
Since the income from the spouses’ work is part of the community, and because, according to paragraph (b) of the mentioned article, there are assets legally excluded from the community, the question arises as to the legal nature of compensation payments received by one of the spouses.
Compensation proceeds may be considered common or personal property, depending on the specific situation being remedied.
Indeed, the indemnity received, which serves to repair the damage suffered, substitutes the affected assets; therefore, the amount received will be common or personal property depending on the type of damage compensated.
For example, when compensation is awarded for a highly personal right (such as compensation for physical and moral damages suffered following a workplace accident), the amount received is considered personal property, not part of the community. Thus, in the event of divorce, it does not need to be included for purposes of division of the common estate.
On the other hand, because assets acquired in substitution of wages are considered common property, compensation received, for instance, from the same workplace accident insofar as it covers wage loss, or, in another example, for early retirement or termination of the employment contract, must be classified as common property. Consequently, in the event of divorce, such amounts must be shared between the former spouses.
With respect to these latter compensations, questions may arise as to whether the entire indemnity amount is common property or whether only part of it should be classified as such, particularly taking into account the length of the employment period and the duration of the marital community.
For example, if one spouse receives compensation for termination of the employment contract, this will be considered common property provided it was acquired during the marriage. The situation is different, however, in cases of divorce based on de facto separation where retroactive effect of the patrimonial consequences is requested from the date of separation: if the compensation is received after the separation but before the divorce is decreed, it will be treated as personal property.
In such a case, the compensation is personal property that need not be divided, since it relates to the loss of earning capacity, and once the spouses are separated de facto, the income from their work is no longer considered common property.
Therefore, a distinction must be drawn between the personal right to compensation, which is not common, and the economic amount received, which may or may not be common depending on the circumstances outlined above.
Since the applicable regime is that of community of acquisitions, the common estate must exclude amounts derived solely from the efforts of one spouse, without contribution from the other, preserving as common property only that which results from the joint efforts of both spouses.
An example is compensation for termination of an employment contract, where the portion relating to seniority remains personal property with respect to the period before or after the marriage.
It would be unreasonable and inconsistent with the purpose of the community of acquisitions regime if, in a divorce, one spouse were to benefit from assets resulting from the exclusive efforts of the other (as in the case of receiving part of the compensation for seniority as mentioned above) or from compensation intended to cover, for example, physical and moral suffering endured by the other spouse.
Did you enjoy this article? Leave your comment below. Your opinion is important to us.
Subscribe to our blog to stay updated on our news and insights.
Do you have any questions? Contact us.
