Settlement of matrimonial property or what are the consequences of divorce for entrepreneurs?
There are several obligations associated with the dissolution of a marriage, including the division of the matrimonial property. In view of our experience, we will outline below the consequences of the division of the matrimonial property, especially for entrepreneurs.
Author of the article: ARROWS (Mgr. Lukáš Fiedler, office@arws.cz, +420 245 007 740)
The dissolution of the marriage leads to the dissolution of the matrimonial property and therefore to its division. The ideal solution is a joint agreement between the spouses on how to regulate their property relations in the future. However, spouses are not always able to agree on the settlement of their joint property and debts. For these situations, it is possible to seek a division of the matrimonial property through the courts. However, it should be noted that this application must be made within a maximum of three years of the divorce. After three years, it is presumed that the matrimonial property has been settled. However, this method of settlement cannot be recommended because of its considerable disadvantages, since in such a situation the spouses become joint owners of all the property and all the debts. It is therefore recommended that the settlement of the relationship be resolved as soon as possible. A specific solution then concerns specific situations where one of the spouses is an entrepreneur or a partner in a company.
In general, the shares of both spouses in the property to be settled are equal, but each spouse will reimburse what has been spent from the community property on his/her sole property. Each spouse then has the right to claim reimbursement of what he or she has spent on the community property from his or her sole property. However, account shall be taken of the way in which each spouse has cared for the family, in particular the care of the children and the family household, and the contribution made by each spouse to the acquisition and maintenance of the assets belonging to the community property.
Business share as part of the community property
If a spouse has acquired a share in a company before the marriage, the other spouse will not acquire any right to that share after the marriage and therefore the share will remain the exclusive property of the acquiring spouse for the duration of the marriage. The share will therefore not be the subject of the division of the matrimonial property either.
If, however, one of the spouses acquired a share in the company during the marriage, but only with his or her own funds, that share is not part of the community property either, and therefore there is no obligation to settle that share on the dissolution of the community of property.
However, in the two situations described above, it should be noted that although the share does not form part of the community property, the proceeds of the share (e.g. a share in the profits of the company) are nevertheless part of the community property.
If one of the spouses has acquired a share in a company during the marriage, even partly from joint funds, only that spouse is a shareholder during the marriage. Even if the other spouse does not become a shareholder in the company, the so-called property part, or the value of the share, is part of the matrimonial property.
If the spouses agree on the division of the community of property, their agreement will normally be that the spouse who acquired the share in the company, i.e. the partner in the company, will become the sole owner of the share, while the other spouse will be settled by the payment of the property value of the share. It can be expected that the court will then decide similarly on the settlement of the community property interest if the spouses are unable to reach an agreement. According to settled case-law, the court will award the business share only to the spouse who, as co-owner of the business share, is a shareholder of the company. This procedure will thus not interfere with the activities of the company whose business share is being settled. However, it can be expected that the spouse who is a shareholder will be obliged to pay the other spouse an equivalent amount of property to settle the relationship.
If both spouses are shareholders in the company and each of them would therefore have a share in the company, it depends in particular on their joint agreement whether both of them will remain in the company after the divorce or whether one spouse will transfer his or her share to the other in return for appropriate compensation.
It can thus be summarised that it is first of all necessary to determine when the spouse acquired the share in the company and, if so, with what funds, and whether any income was generated from that share.
Settlement of the matrimonial property in a business
The second specificity is where at least one of the spouses has carried on a business during the marriage. If he or she started a business before the marriage, then both the proceeds of his or her business during the marriage and what was spent from the community property during the marriage back into his or her business (investment in a business plant or business) are part of the community property. If one of the spouses started his/her business during the marriage, then the property value of his/her business, including the proceeds of that business, is also subject to the division of the community property. In practice, it is then often difficult to quantify these values and therefore it is necessary to call in an expert, which entails additional costs.
If an agreement has been concluded between the spouses during the marriage or if the subject of the settlement is a matter for which the law requires a written form, as well as a contract for the transfer of ownership (e.g. transfer of immovable property or transfer of a business share), then the settlement agreement also requires a written form. Although in other cases the law does not require the agreement to be in writing, a written form is desirable and is more than recommended in order to avoid any doubts about mutual settlement in the future.
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