Division of Business Assets in German Divorce Cases

German Family Lawyers

Division of Business Assets in German Divorce Cases

German Family Lawyers

If a married couple runs a German company, the liquidity of the company may be at risk in the event of a divorce. The division of the joint assets and, thus, of the company shares can possibly lead to the break-up and insolvency of the company. Therefore, efficient preventive measures that protect the company are of enormous importance. The prenuptial agreement is considered one of the most proven means in this regard.

The German law firm Schlun & Elseven Rechtsanwälte offers entrepreneurs comprehensive support in all divorce law matters – especially in connection with the division of joint business assets. Our German family law attorneys have in-depth expertise and many years of experience to enforce your interests quickly and effectively and to protect your business from damage in the best possible way.

In addition, as a preventive measure, we offer expert drafting and preparation of prenuptial and partnership agreements.

You are here: Home » Schlun & Elseven Lawyers: Legal Solutions Made in Germany » German Lawyer for Family Law » Divorce Lawyers in Germany » Division of Business Assets in German Divorce Case

Google Rating | Based on 419 reviews

Legal assistance in German Divorce Law

Clarification and Enforcement of Claims
  • Advice on all relevant asset issues

  • Business valuation for equalisation of gains

  • Tax-optimised asset division

  • Enforcement of family law claims and demands

Expertise
  • Assets: Duty and right to provide and receive information

  • Prenuptial agreement | Divorce settlement agreement

  • Division of property and equalisation of gains

  • Out-of-court settlement
  • Equalisation of gains: Valuation of debts | Insolvency law aspects

  • Equalisation of purchasing power in the case of additional profit

  • Relevant aspects of German inheritance law

The Importance of the Prenuptial Agreement in Germany

The prenuptial agreement is the surest way of protecting business assets following a divorce in Germany. The marriage contract (prenuptial agreement) is provided for under German law by § 1408 BGB. All married couples should consider it as it allows for certainty in the event of a divorce.

A prenuptial agreement designed and agreed upon at the right time can prevent bitter disputes between the pair from arising. In addition, the contract will provide clear guidance on gains made during the marriage, spousal maintenance and pension equalisation rights. It is the best time to draft the prenuptial agreement before the marriage (during the engagement) and in the early stages of the marriage. The best arrangements are prepared when the parties do not have a reason to believe the marriage will end soon.

Although a marriage contract should be considered by all couples, for entrepreneurial partners, it is vital. In Germany, the assets obtained during the course of a marriage are seen as the accrued gains of the spouses and thus will be divided equally in the event of a marriage ending. Although assets gained pre-marriage are not counted, this leaves you open to significant losses.
This statutory requirement for accrued gains is provided for under § 1363 BGB and states that this is the statutory requirement if there has not been an agreement:
(§ 1363 BGB) Community of accrued gains

  1. The spouses live under the property regime of community of accrued gains if they do not by marriage contract agree otherwise.
  2. The property of the husband and the property of the wife do not become the common property of the spouses; the same applies to property that one spouse acquires after marriage. The accrued gains that the spouses acquire in the marriage, however, are equalised if the community of accrued gains ends.

Without the prenuptial agreement limiting what the other spouse is entitled to in the event of a divorce, the entrepreneur leaves themselves open to significant disruption, potentially losing their business. Working alongside an expert family lawyer is crucial in drafting and assessing the prenuptial agreement.

Finally, it is noteworthy that the parties can alter prenuptial agreements in the future. It is advisable to consult with legal experts when making such changes to ensure that they remain in line with the requirements of German law. Improper actions can leave the individual open to legal conflicts in the future.

Limitations of the Prenuptial Agreement in Germany

The prenuptial agreement is the best means of reducing the risks involved with the division of business assets post-divorce. However, the prenuptial agreement also has limitations.

Spouses in a significantly better financial position than the other cannot simply pressure the other spouse into signing a detrimental agreement. Courts will intervene in cases where a spouse seeks to completely avoid paying spousal maintenance when the other spouse would appear to require it. They will also likely intervene when one spouse avoids paying child support. Essentially, if there are children in the marriage, it is likely that one spouse may have reduced their earning potential to take a child-caring role. Courts want to ensure that this is not exploited in the prenuptial agreement.

Trying to resolve such disputes out of court in an amicable fashion is usually in the parties’ best interests. Where it is in our client’s interests, our lawyers seek such resolutions to disputes. Time-consuming and costly legal disputes may cause significant complications for clients seeking to protect their business assets in the event of a divorce case.

Amicable Divorce Proceedings and the Division of Business Assets

If the marriage contract has not been drawn up, and you have reason to fear that this may damage your business assets, our German family lawyers will support you. The divorce does not prevent you from being a shareholder in a company, and it does necessarily mean that you need to lose business assets; however, without a pre-agreed marriage contract, it may mean that you need to negotiate carefully.

An amicable divorce, where critical matters such as spousal maintenance, pension equalisation and gains equalisation are resolved outside of court, is strongly advisable. Consulting with an experienced divorce lawyer in Germany ensures you receive expert advice concerning such negotiations and discussions.

Reaching an agreement that protects your business may involve negotiating terms that include some of the following points. These points refer to the equalisation of gains.

  • Reach an agreement to exclude the company and business assets from the equalisation of gains,
  • Agree to only value the company at book value,
  • Agree to set a maximum amount for the equalisation of gains,
  • Defer the equalisation claim to allow you to get the business assets in order,
  • Agree to have the equalisation claim paid in instalments.

These are just some of the recommended steps to take to reduce the impact of the divorce on your business assets. Should an agreement be reached which is favourable to all sides, prepare a notarially-designed legal agreement. Remember, an amicable divorce is usually the preferred option for all parties, especially in cases with children involved. An amicable divorce allows for more accessible future arrangements concerning child custody and access and a smoother and less time-consuming divorce process.

Divorce in Germany and Entrepreneurial Spouses

It may be the case that both spouses are involved in the company, whether as shareholders, managers or partners. Of course, it is advisable to try and maintain a professional relationship for the sake of the business. Still, following the divorce may permanently damage the trust element necessary for a business relationship. In such situations, it is even more critical for a mutually beneficial prenuptial agreement to be agreed upon beforehand, and even if not, to have an amicable divorce. Time spent focused on the divorce and conflict is time diverted from achieving what is best for the business.

However, such an ideal arrangement is not always possible. It may be advisable to agree to a partnership agreement in advance to prevent private disputes between you as business partners from disrupting the company. Such a partnership agreement can act as a defence against spouses from acting maliciously, such as by blocking necessary business decisions through their partnership position.

Ensuring an advisory board in the company is another means of protecting the company as they act as a go-between for the company and the shareholders. Having such an advisory board in the company prevents such disputes between shareholders from damaging the company. Other steps to protect the company are having one spouse buy the shares of the other or having a mechanism enshrined that the current shareholders have a right of first refusal when another shareholder wishes to sell their shares.

If both spouses have been heavily involved with the business, resolving the issue professionally and amicably is the best way to ensure the company can continue. Consulting with German divorce lawyers to discuss how best to achieve this result is strongly advised.

Schlun & Elseven Logo

Practice Group: German Family Law

Practice Group:
German Family Law

Dr. Tim Schlun

Lawyer | Managing Partner

Maria Ivanova

Certified Specialist Lawyer in Family Law

Contact our Lawyers for German Family Law

Please use our online form to outline your request to us. After receiving your request, we will make a brief initial assessment based on the facts described and provide you with a cost offer. You can then decide whether you would like to engage our services.

Locations & Office Times

Mo – Fr: 09:00 – 19:00
24h Contact: 0221 93295960
Email: info@se-legal.de
Appointments made by telephone only.

Von-Coels-Str. 214
52080 Aachen
Tel: +49 241 4757140
Fax: 0241 47571469

Kyffhäuserstr. 45
50674 Cologne
Tel: +49 221 93295960
Fax: 0221 932959669

Düsseldorfer Str. 70
40545 Düsseldorf
Tel: +49 211 882 84196
Fax: 0221 932959669

Locations & Office Times

Mo – Fr: 09:00 – 19:00
24h Contact: 0221 93295960
Email: info@se-legal.de
Appointments made by telephone only.

Conference Rooms

Berlin 10785, Potsdamer Platz 10

Frankfurt 60314, Hanauer Landstrasse 291 B

Hamburg 20354, Neuer Wall 63

München 80339, Theresienhöhe 28