Compensatory adjustment is a leveling asset, which is paid to the less wealthy spouse by the wealthier spouse when a marriage is dissolved and the division of property is made.
A married couple might have accumulated community property, which they have acquired during the marriage, and to which they both have same rights, or spouses can both have separate property owned personally only, which is either acquired before the marriage or be excluded from the community property via a prenuptial agreement. Also, it is possible that one of the spouses is bequeathed property via a testament that a clause which decrees the property must not be included in the community property.
Adjustment can also be paid between the widow and the heirs of the decedent. However, the widow is not obliged to pay adjustment, but they can choose if they wish to pay or not.
The process of division of property begins with either the marriage ending in a divorce or one of the spouse’s death. The right to community property is determined by the time when the application for dissolution of the marriage is pending in the District Court or at a spouse’s time of death, meaning that moment is the basis upon which the division is made. After the division has been conducted neither the spouse has a right to each other’s property.
How to Know the Amount of Adjustment?
The amount of adjustment can be determined with a division estimate. Such an estimate includes the sum of different assets contributing to the community property from which debts are subtracted. If there are more assets than debt the remaining assets are then divided equally to both spouses, or to the surviving spouse and the heirs of the other spouse.
The law provides that any property acquired after the institution of the divorce application or a spouse’s death is separate from the community property.
It is not mandatory to divide the assets with a division estimate. Thus, the spouses are entitled to make a settlement of division as they please. However, an estimate may prove useful when determining if there are any chances to mediate a division dispute.
Adjustment Payment Methods
Adjustment can paid in cash or other assets having monetary value. The party paying adjustment has the right to choose what sorts of assets they give away.
On the other hand, the party receiving adjustment is entitled to claim property deemed essential to their trade, on the condition that such a claim does not cause considerable harm to the party paying adjustment.
Adjustment need not be paid at all in the case of the receiving party is bankrupt, or if the spouse otherwise entitled to receive adjustment has caused the death of the other spouse by an unlawful act or by contributing to such an act.
Equitable Distribution as a Rule of Thumb
In Finland equitable distribution of property is usually understood being analogous to equal distribution, meaning the property is divided by a fifty-fifty split. We can consider the system still having the idea of equitable distribution due to the rule not being strict and can be deviated from. This would be done if equal division would lead to an unreasonable outcome, or if one of the spouses would receive unjustified enrichment.
Circumstances in favor of mediating the distribution can be for example the marriage being very short-term or if one of the spouses receives a considerable inheritance just before filing for divorce. During mediation the rights to community property can be limited or altogether revoked, thus making the couple having only personal property.
Mediation can also be conducted so that a certain asset is made fully or partially personal property and outside distribution.
Assistance at Resolving Disputes
If the divorced couple or the widow and the decedent’s heirs cannot settle the division of property, they may request the District Court to assign a neutral administrator to conduct the division.
The administrator exercises authority over the division process and, in such a case, the person obliged to pay adjustment cannot make their own decisions of the payment of adjustment but the administrator decrees how the payment must be made i.e what assets are to be used as compensation. The administrator, however, is obliged to take in account the wishes of the party obliged to pat adjustment.
The administrator is entitled to receive a reward for their work and be compensated for any expenses. The amount of these depends on the scope and quality of the work as well as time used.
English translation by Lasse Jelekäinen