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  • Swiss Legal Finance

Divorce: a niche market in third-party funding




In the first two articles of this blog series, we provided an overview of third-party litigation

third-party funding (TPF) is a flexible funding instrument that can meet the needs of plaintiffs or

defendants with a solid case who might not be able to afford the cost of litigation or arbitration

– or who simply don’t have the cash on hand to pay for it.

While TPF is often associated with business disputes, it can also be used in cases involving

individuals. There are a couple of such niche market opportunities in Switzerland: we’ll look at

divorce proceedings in this article and inheritance proceedings in the next one.

Marriage and divorce in Switzerland

The divorce rate in Switzerland has not changed much in recent years – just under one in two

marriages here ends in divorce. Yet the average age of divorcing spouses is rising, which means

they have more property to divide when their marriage ends.

Regardless of the value of their assets, however, splitting them fairly in divorce proceedings can

prove tricky, even under the best of circumstances.

Swiss law attempts to get ahead of the problem by setting out clear property ownership rules

for spouses from the start. Couples that marry in Switzerland must select one of three types of

marital property agreements that broadly identify what each spouse owns and who would get

what in the event of divorce.

The first option, called joint ownership of acquired property, applies by default if the couple

doesn’t specifically select one of the other two types of agreement. It defines two types of

property:

1. own property: the assets owned by each spouse before getting married, together with

assets gifted to them or inherited while they’re married

2. acquired property: the assets each spouse acquires while married.

If the couple divorces, the spouses keep their own property and divide their acquired property

equally.

The second property agreement is referred to as community of property, and it requires a

signed contract. While married, the spouses manage their assets jointly, and if they divorce,

they share their assets equally.

The third agreement, separation of property, also takes the form of a signed contract. Under

this arrangement, the spouses keep their assets separate and do not share their assets if their

marriage ends.


Third-party funding

Switzerland’s three-pronged approach to marital property ownership is relatively clear, yet

disputes do arise – and they can lead to expensive proceedings when you factor in the fees

charged by lawyers and the courts.

Unfortunately, spouses may not necessarily be on equal financial footing. Available cash may be

low for the spouse who’s not the breadwinner in the couple or whose assets are mostly tied up

in jointly owned investments, for example.

TPF can be an attractive option for the disadvantaged spouse, ensuring that he or she can pay

for solid legal representation. The third-party funder can also help out in other ways. Its experts

will begin by assessing the nature, location and value of all assets at stake – a crucial step in

cases where assets may be hard to trace or are spread out over several countries. The funder

will also keep an eye on the proceedings from the start, providing expert input as necessary.

This expertise can be particularly useful when assets are held indirectly through complex

structures such as trusts or holding companies.

Getting divorced is never easy, but it should at least be fair. If you’d like to know more about

third-party funding, drop us a line at Swiss Legal Finance: info@swisslegalfinance.ch or 022 512

37 37. And be sure to check out our website: www.swisslegalfinance.ch.

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