Divorce without impact on the company

Divorce can be not only a personal crisis but also a threat to your business. If the business is a community property company, you risk splitting it up, losing control and value. The good news? There are legal tools to prevent this from happening. In this article, we'll show you how to get the rules right and protect your business before a crisis hits.

Article author: ARROWS (Mgr. Vendula Růžková, LL.M., MBA, office@arws.cz, +420 245 007 740)

Prenuptial or marriage contract: First Line of Defense

Deciding to go into business is a crucial step - but so is how you arrange your relationship with your partner. If the business is not "excluded" from the community property (CP) in time, it may be divided or lose control of the business in a divorce.

One of the most effective solutions is to enter into a prenuptial or marital agreement, which clearly defines what is the sole property of one spouse. Such an agreement may specifically exclude the business or business interest from the community property regime - meaning that even in a divorce, the business will not be considered community property.

What does such an agreement get you?

• Clear rules - you define that the company or business share belongs to only one spouse.
• Protection on divorce - the business will not be divided as part of the property settlement.
• Conflict prevention - both parties know in advance where they stand.

Practical example:

A client, co-owner of a family business, and his wife agreed to a marital agreement that excluded the business from the community property. After a few years, the divorce was finalized - thanks to a timely modification, he did not have to deal with complicated transfers or worry about the running of the business. Everything was done correctly and without interference with the business.

Moreover, the legislation allows not only to narrow the community of property but also to set up a separate property regime where each spouse owns only what he or she has acquired. This regime represents the highest level of protection because no assets are divided on divorce.

Financial boundaries between business and family

Getting the legal regime right is important, but not enough. If the business finances are mixed with the family finances, there is a risk that the court will consider the business to be part of the SJM - despite the agreement.

What you can do now:

• Separate the books - business income and expenses must be kept separate.
• Set up a separate account for the company - avoid tracing the origin of the money.
• Document investments - if the company has received money from joint assets, keep a record of it.

Practical experience:

An entrepreneur invested her own funds in the company but was later unable to prove their origin. The partner demanded a share of the company in the divorce. If she had kept documentation and separate accounts, she could have avoided a similar dispute altogether.

Are you planning to invest in the company? See a lawyer

Are you considering a major investment during your marriage - buying real estate, new technology or taking out a loan? Even such a move can significantly affect the marital property situation.

What to watch out for:

• Make sure you get your spouse's written consent if the transaction affects community property.
• Get advice from a lawyer - he or she can help set up the steps so that no claims from the other party arise later.
• Consider updating the agreement - legal documentation should always be up to date with the company's current plans.

Large investments can be a great step for business growth. But without legal backing, they can backfire on you in a divorce.

Conflict prevention: what to watch out for

Many unpleasant situations can be avoided if you address relationships and assets early - and openly. It's not just about paperwork, it's about trust and preventing misunderstandings.

We recommend:

1. Don't wait until there's a problem - deal with contracts when the relationship is stable.
2. Talk about property together - open communication is better than silence that leads to disputes.
3. Update documents - your business is evolving, the legal framework should keep up.

Well-established relationships are not a sign of mistrust. On the contrary - they are the basis for stability, predictability and a fair approach to partnership and business.

Conclusion.

When you know your business is legally protected, you have more peace of mind. Don't underestimate the importance of setting up property relationships early - whether you choose to have a prenuptial agreement, separate accounting or consult with a lawyer.

Contact us today. Together, we'll make sure the business stays in your hands - regardless of personal changes.