High-Net-Worth Divorce in Germany

Divorce under German law adheres to a no-fault divorce system, eliminating the need for spouses to prove wrongdoing. Under German law, the primary grounds for divorce lie in acknowledging the irreparable breakdown of the marital union. The German Civil Code (BGB) governs divorce in the provisions §§ 1564-1568 BGB. A marriage is considered “failed” when marital cohabitation is nonexistent. For this to be the case, the former spouses must dissolve the conjugal partnership in any regard.

Before initiating divorce proceedings, a mandatory separation period is typically required (§1567 para.1 BGB). The duration of this separation period varies based on individual circumstances but commonly spans one year. This prerequisite provides spouses with a period for reflection and potential reconciliation. However, in case of a dispute, a marriage is only incontrovertibly considered failed if the (former) spouses have lived separately for three years (§1566 para.1 BGB).

Regarding asset division, German family law underscores the principle of equitable distribution of assets amassed during the marriage. The court endeavours to ensure a fair allocation of property and financial resources, recognising the unique contributions of each spouse. It should be noted that equitable distribution does not necessarily mean equal distribution but rather a fair and just allocation of marital assets. The court considers various factors to ensure that the final distribution aligns with the unique circumstances of each case.

Child custody decisions prioritise the child’s best interests, fostering a preference for joint custody arrangements. Child support, determined by the financial capacities of each parent, aims to provide for the child’s well-being and necessities. In Germany, child custody decisions revolve around the paramount principle of acting in the child’s best interests. The court assesses various factors to determine the custody arrangement that most benefits the child’s overall well-being. Factors considered may include the child’s age, health, emotional and psychological needs, and the relationship with each parent.

In situations where financial disparities emerge post-divorce, the court may order spousal support or alimony. This determination involves a calculation that considers the duration of the marriage, economic imbalances, and the standard of living maintained during the marital union. The overall legal approach in Germany centres on facilitating a just and considerate resolution to divorce proceedings, acknowledging the multifaceted aspects of family dynamics.

Divorces involving high-net-worth individuals present unique challenges beyond the standard considerations mentioned above. At Schlun & Elseven Rechtsanwälte, we specialise in addressing these complexities, ensuring our clients’ interests are safeguarded throughout the process.

For example, dividing assets and property is a crucial aspect of divorces. However, this aspect is amplified in divorces involving individuals with a high net worth. High-net-worth individuals often have diverse and substantial assets, including real estate, investments, businesses, and valuable personal property. The equitable division of these assets requires a meticulous valuation process and a strategic approach to ensure fairness and transparency. Our legal team collaborates with financial professionals to value diverse assets accurately, providing a solid foundation for such an equitable distribution.

Furthermore, we are aware that the presence of significant business and financial interests adds a layer of complexity to high-net-worth divorces. At Schlun & Elseven Rechtsanwälte, our full-service approach means that we can assess the matter of divorce from a corporate and family law angle. Our team includes corporate law experts who are available to determine the value of businesses, stocks, and other financial holdings accurately. We develop tailored strategies to address the unique challenges associated with the division of these assets, protecting our clients’ aims throughout the process. In such cases, due to the significant financial assets involved, tax implications can be a crucial consideration. Our lawyers implement legal strategies to optimise tax outcomes during asset division and support payments.

The presence of significant business and financial interests adds a layer of complexity to high-net-worth divorces. Business interests are often one of the most complex components of high-net-worth divorce cases in Germany. Accurately assessing the value of businesses is crucial. Schlun & Elseven Rechtsanwälte engages financial experts with expertise in business valuation to conduct a comprehensive analysis. This may involve assessing the company’s financial statements, future earning potential, and market value. By accurately assessing the value of businesses, stocks, and other financial holdings, we can develop tailored strategies to address the unique challenges associated with the division of these assets. We aim to protect our clients’ interests throughout these proceedings.

Considerations extend beyond valuation if one or both spouses have a significant role in a business. Our lawyers consider these vital aspects throughout, and we work to protect the ongoing operations and stability of the business, taking into account the potential impact of the divorce on its day-to-day functioning.

Beyond business assets, high-net-worth individuals may also have diverse financial holdings, including stocks, bonds, investments, and other financial instruments. Our collaborative approach involves meticulously assessing these holdings to determine their value and understand their implications for the overall financial portfolio. In some cases, the value of financial interests extends beyond their immediate worth. It may involve identifying and valuing income streams, dividends, or other financial benefits associated with these interests. This comprehensive approach ensures that the whole financial picture is considered.

At Schlun & Elseven Rechtsanwälte, we are aware that each high-net-worth divorce case is unique, and standard approaches may not apply. Our lawyers readily develop tailored strategies for the division of business and financial interests. This involves considering the nature of the assets, their liquidity, and the impact of the division on the financial well-being of both parties. Furthermore, our approach includes financial planning to address the long-term consequences of business divisions and financial interests. This planning aims to secure the economic well-being of our clients post-divorce.

Spousal support is another aspect of high-net-worth divorces that requires intricate and careful planning. The court assesses the financial needs of the supported spouse, considering the accustomed lifestyle, income disparities, and the duration of the marriage. Our legal team will provide clear advice regarding spousal support arrangements in Germany and ensure our clients are fully aware of their legal rights. Our lawyers will protect our client’s financial and legal interests throughout the divorce proceedings.

In a related aspect, high-net-worth divorces can introduce additional complexities to child custody and support matters. While the child’s best interests remain paramount, each parent’s financial capabilities play a significant role in determining child support. The court considers the incomes of both parents when determining child support, and the obligation is generally proportional to each parent’s financial capacity. This approach aims to distribute the financial responsibility for the child fairly between both parents.

The accustomed lifestyle of the child is a crucial consideration. Lawyers argue for child support levels that enable the child to maintain a lifestyle similar to that experienced during the marriage, acknowledging the financial privileges that may be associated with a high-net-worth family. However, it should also be stressed that high-net-worth individuals may experience fluctuations in income and financial circumstances. Our attorneys facilitate modifications to child support orders when significant changes occur, ensuring the child’s evolving needs are met.

Regarding child custody, German family law generally favours joint custody, emphasising the importance of both parents being actively involved in the child’s life. Joint custody allows both parents to participate in significant decisions affecting the child, such as education, healthcare, and religious upbringing. However, in cases where joint custody is not feasible or in the child’s best interests, sole custody may be awarded to one parent. Our legal team works diligently to ensure that the welfare of the children is prioritised while addressing the financial responsibilities of both parents.

Schlun & Elseven Rechtsanwälte’s full-service, multidisciplinary approach is highly beneficial in high-net-worth divorce cases due to the complex financial and legal issues involved. Our approach requires collaboration between our legal professionals in various legal fields, financial analysts, and other experts. We ensure that no critical detail is overlooked in the process, and our multidisciplinary nature leads to streamlined communication between our legal professionals. Such efficient communication can be crucial in cases as it minimises delays and ensures that all aspects of the case are addressed promptly. This efficiency can contribute to a more expeditious resolution.

Amongst our experts, we have many professionals with experience in areas of law relating to the corporate sphere. They appreciate the challenges that arise, particularly regarding entrepreneurial divorce, and how such divorces can lead to difficulties for the company and related business interests. Our team will pay particular attention to such risks and will ensure they are central to considerations during every aspect of the divorce process.

Inheritance and estate planning can also be significant considerations in high-net-worth divorces. Many wealthy couples choose to set aside a portion of their assets for the benefit of their children; however, when they find themselves going through a divorce, such gifts can be impacted during divorce negotiations. At Schlun & Elseven Rechtsanwälte, our legal services include examining the divorce from the perspective of how it will affect your will and estate planning. Our team is adept at business succession planning for those involved in an entrepreneurial divorce.

Tax issues play a role in all divorces; however, in a high-asset divorce case, taxes can be more significant because of property and asset value and the complexities of their investments. Our German tax law experts can develop strategies that optimise tax outcomes during asset division and spousal support arrangements.