International Divorces in China (II): Division of Assets

Exploring the complexities of asset divisions in international divorce cases often proves contentious and intricate.

In this second part of our International Divorce article, we cover extensively regarding asset division and ownership of foreigners and their spouse in the divorce process in China.

01. What property belongs to the personal property of one of the spouses in the event of divorce?

Article 1063 of the Civil Code clearly outlines the personal assets of an individual spouse, which, upon marriage, remain separate and do not become shared property with the other spouse.

(i) Premarital property, defined as assets owned by an individual prior to marriage registration, retains its status as personal ownership unless otherwise specified by mutual agreement.

(ii) Personal Injury Compensation: Any damages or compensation received by either party for bodily injury sustained by an individual, directly associated with the injury, is considered personal property.

(iii) Property designated in a will or gift agreement as belonging exclusively to one party.

(iv) Household items set aside for personal use by an individual, like clothing and personal care items, are typically regarded as personal property.

(v) The law also offers a broad guideline to encompass other instances of clearly personal property and to accommodate the varied aspects of social life. When determining the allocation of property, an asset can only be classified as personal property if it doesn't fit into the first four categories mentioned above but exhibits distinct personal exclusivity. If the classification of the property is ambiguous, it is treated as shared property.

02. What property belongs to the joint property of husband and wife?

The Civil Code and the Interpretation on the Application of the Marriage and Family Part of the Civil Code specify that the following assets constitute the shared property of the spouses.

i) Earnings, bonuses, and compensation for work performed.

ii) Income generated from production, business activities, and investments.

(iii) Income derived from intellectual property rights.

(iv) Inherited or donated assets, excluding those specifically designated in a will or gift contract as belonging solely to one party.

(v) Profits obtained from investments made by one of the parties using their personal assets.

(vi) Housing subsidies and housing funds received or entitled to be received by both spouses.

(vii) Basic pension and bankruptcy resettlement compensation received or eligible for both parties.

(viii) Other assets that are designated for joint ownership

03. Can the spouses agree that property acquired during the marriage and pre-marital property shall belong to each of them?

Yes. Indeed, both parties should sign a written agreement, or the assets acquired during the marriage will be deemed joint property of the spouses unless otherwise provided in laws. We strongly recommend notarizing the relevant property agreement to guarantee its validity and recognition by the court in the event of any disputes.

04. How is the joint property of husband and wife distributed by the Chinese court in case of divorce?

In principle, assets are typically distributed equally, following a 50/50 division. However, Chinese courts have the discretion to allocate a larger portion to the party responsible for childcare, the woman, or the innocent party, based on the specific circumstances of the property.

05. How is the property purchased for both parties at the expense of one parent to be distributed in the event of divorce?

If the house was bought by the parents of one party of the spouses before their marriage, it shall be deemed as the gift to their own child unless expressly stated by the parents that the gift belongs to the spouses. If the house was bought by the parents of one party of the spouses after their marriage, it follows the agreement made by the couple regarding the house at that time. If there is no agreement or the agreement is ambiguous, unless the parents explicitly intended the gift for only one of the spouses, the property is considered a gift to the spouses and thus becomes joint marital property.

Question & Answers

Q. (1) Can the spouse who has contributed more to the family ask for compensation from the other spouse?

A.In accordance with Article 1088 of the Civil Code, a spouse who has taken on more significant responsibilities such as child-rearing, elderly care, or supporting the other spouse in their endeavors, holds the right to seek compensation from the other party in the event of divorce. However, the Civil Code does not define specific criteria for this compensation, often resolved through negotiation between the spouses or by the court's decision.

Q (2) In the event of a divorce, if one of the parties is cheating on his/her spouse, how can the other party maximize his/her interests in the division of property?

A. As per Article 1091 of the Civil Code, if one spouse cohabits with another individual, leading to divorce, the innocent party is entitled to seek compensation from the party at fault.

Article 1091 of the Civil Code grants the innocent party the right to seek compensation in cases where circumstances leading to divorce are attributable to the fault of the other party.

(i) Bigamy

(ii) Living together with someone else.

(iii) Family  violence

(iv) Abuse or abandonment of family members

(v) Other major faults.

Q (3) What should be done if one of the spouses is found to have transferred property during the divorce?

A. If one of the spouse is found to have concealed, transferred, sold, damaged, or recklessly spent shared marital assets, or attempted to incur joint debts deceitfully to seize the other spouse's property, the court may, during the divorce asset division process, allocate a reduced or no share of the marital assets to that spouse. If such misconduct is discovered by the other party after the divorce, they have the right to petition the court for a reconsideration of the division of the couple's shared assets.

Q (4) What debts are shared by both spouses?

A (i) Debts jointly signed and acknowledged by both spouses.

(ii) Debts accumulated by one spouse, for which the other spouse subsequently acknowledges joint responsibility.

(iii) Debts accumulated by one spouse in their own name during the marriage to cover the family's everyday necessities (excluding debts exceeding these needs.

Q. (2) How are joint debts to be paid by both spouses?

A. Both parties are responsible for payment.