The role of marital property law

How assets are divided during a divorce largely depends on the type of marital arrangement in place.

1. Community of Property (prior to 2018): If you married before January 1, 2018, without a prenuptial agreement, all assets and debts—including the business—are considered part of a general community of property and will be equally divided during the divorce.
2. Limited Community of Property (from 2018): For marriages after January 1, 2018, only jointly acquired assets and debts are included in the community. Personal assets and inheritances are excluded. Here, it matters whether the business was established before or during the marriage.
3. Prenuptial Agreement: With a prenuptial agreement, assets and debts—such as a business—are predetermined to remain separate. For instance, the agreement may state that the business is excluded from division in the event of a divorce.

Understanding these rules is essential during a divorce, and I can guide you through the process. Financial planners or tax specialists may sometimes be consulted, but I remain your point of contact throughout.

The emotional impact

Divorces cannot be resolved effectively without addressing the emotional toll on those involved. This is something I prioritize in my practice. That said, if we set the emotional aspects aside momentarily, the financial considerations center around the following elements:

Child support, spousal support, and division of assets and debts

Child support is intended to cover the living expenses of minor and/or dependent children. While partners can separate as a couple, they remain parents for life. The guiding principle is that children should not suffer materially from the divorce and should maintain the same standard of living. Rules for determining child support are based on the joint disposable net income during the marriage or cohabitation.

Both parents must contribute to the children’s expenses in proportion to their financial capacity. If sufficient “financial capacity” exists, parents are expected to uphold their children’s needs as before.

Spousal support acts as financial aftercare for the ex-partner following the marriage or relationship. It is temporary and based on the net income disparity between the partners. Similar to child support, spousal support is subject to numerous calculations and options. Spousal support is considered only if there is remaining financial capacity after child support obligations are met—since every euro can only be spent once.

Net disposable Income, this concept has already been mentioned several times. For entrepreneurs—especially freelancers or small business owners—this is often a moving target. Net income can fluctuate significantly and may include windfalls or setbacks. With my experience, I help parties at the table find practical solutions for handling such variability.

Dividing assets and debts

While agreements are often reached regarding household items and similar possessions, complications can arise when inheritances or gifts are involved. In my practice, these are typically manageable. Even for dividing the equity of a jointly owned home, agreements are usually reached.

However, when a business is involved, things can become far more complex. Key questions include:

• Does the business fall within the marital property to be divided?
• What does the prenuptial agreement stipulate, if one exists?
• What if the entrepreneur has built substantial wealth through the business but contributed minimally to the shared household?
• How is the value of the business determined?
• How do you account for the contributions of a partner who has worked in the business for years without compensation?
• What happens if it is financially unfeasible to buy out the partner or split the business?

When a business is part of the divorce, the process can (but doesn’t always) become exceptionally complicated. I’ve handled many such cases in my practice.

Seeking professional support

If a business is involved in the divorce, expert assistance is often indispensable. An experienced mediator, such as myself, can guide you through property law, the division of assets, and the terms of prenuptial agreements or community property laws. Tax implications and deductions also require attention, and advice will be provided.

Divorce brings significant changes, particularly when a business is involved. With thorough preparation and the right legal and financial support, both partners will have a clear understanding of their rights and obligations.

Documents

• Code of conduct for mediators
• Standard agreement
• Complaints procedure