Compensation for property in divorce

Divorce is not only an emotional ordeal, but also a complex legal process, especially when it comes to the division of property. Ukrainian law stipulates that spouses have equal rights to property acquired during marriage.

However, the division does not always take place “physically”. One of the spouses may be given more property - provided that the other is paid monetary compensation.

In this article, we will consider what compensation for property during divorce is, how it is determined, drawn up and what nuances should be taken into account.

Marital property: joint or personal property?

Before talking about compensation, it is important to clearly delineate which property is subject to division.

Joint ownership A spouse is considered:

• property acquired during the marriage;
• income of each spouse (salary, business profits, dividends, etc.);
• purchased things, real estate, vehicles;
• deposits in banks, savings.

Personal property is recognized:

• property that was acquired before marriage;
• donated or inherited property;
• personal items, even if purchased during marriage (except luxury items);
• intellectual property created before marriage.

Importantly: unless it is proven that property is personal, it is considered joint.

How is property divided in a divorce?

The legislation of Ukraine (in particular, the Family Code) provides for equal rights of both spouses to property, i.e. each has the right to ½ share in the joint property.

However, different options for division are possible:

• physical division (when specific property is transferred to each person);
• transfer of property to one spouse with compensation to the other;
• contractual compensation in cash or other form;
• judicial separation - upon application by one of the spouses.

What is property compensation?

Compensation is a sum of money or other form of compensation that one spouse pays to the other for the share of property that he or she receives in excess of his or her share.

For example, if a car worth UAH 500,000 remains in the ownership of one spouse, the other is entitled to compensation in the amount of UAH 250,000 (i.e. half the value) if it is joint property.

When is compensation possible?

Compensation is possible in several cases:

• when the spouses voluntarily agreed that the property would remain with one of them and the other would receive the money;
• in the event of judicial division, when it is objectively impossible or impractical to physically divide the property;
• if one of the spouses already uses the property and is interested in keeping it for themselves;
• in the event of a marriage contract that provides for compensatory terms.

How is the amount of compensation determined?

Property valuation is carried out:

• by agreement of the parties;
• or through an independent expert assessment (by a licensed appraiser).

If the parties do not agree on the value of the property, the court determines it based on the evidence provided by the parties, or orders a forensic examination.

Importantly: Compensation is paid taking into account the market value of the property at the time of consideration of the case or conclusion of the agreement.

Legal registration of compensation

Compensation can be:

• voluntary — drawn up in the form of a contract between spouses (signed by a notary, especially if it concerns real estate);
• forced — by court decision, if the parties have not reached an agreement.

The contract or court decision must clearly state:

• amount of compensation;
• terms and method of its payment;
• what exactly is the object of compensation;
• legal consequences (e.g. loss of ownership of property after payment).

Can compensation be avoided?

Compensation can only be avoided if:

• by mutual consent of the parties (when neither party claims a share in a specific property);
• if it is proven that the property is the personal property of one of the spouses;
• in the event that the property is recognized as joint ownership in a smaller share.

Therefore, compensation for property upon divorce is a legally defined tool for the fair distribution of joint property when it is impossible or undesirable to physically divide it. To avoid litigation, losses, or unfair division, spouses should agree on the terms in advance or seek legal advice.

Specialists of the law firm "Prikhodko and Partners" will help you assess the volume and status of the property; negotiate compensation; prepare a legally competent contract; and assist in the division of property in court.

We guarantee the protection of your interests, confidentiality, and professionalism.