There is a lot at stake when a married couple divorces and one of the spouses is an entrepreneur. One challenge this can present for both the company as well as the couple is the potential headache that comes from having to assess the value of a stake in a GmbH – a type of German limited liability company – and having to grapple with the equalization of accrued gains.
In Germany, married couples without a prenuptial agreement automatically find themselves under the matrimonial property regime known as the community of accrued gains, an arrangement which often leads to problems if, for instance, one spouse is an entrepreneur and holds shares in a GmbH, notes commercial law firm MTR Legal Rechtsanwälte.
The equalization of accrued gains involves separately calculating the wealth of the couple at the time of their wedding and at the time of filing for divorce. The “gains” here are the difference between these two values. If one of the spouses has accrued more gains than the other, this is balanced out by the latter being entitled to half of the excess. Any shares in a GmbH, whose value may have gone up during the time of the marriage, are also taken into account.
The process generally entails the non-entrepreneurial spouse being entitled to a cash payment for their portion of the gains made by the company shares. However, this can also place a heavy strain on the company’s assets and potentially private assets as well. Alternatively, the spouse in question might consider becoming a shareholder in the GmbH, though this is oftentimes precluded by company law and rarely welcomed as a solution.
One common point of disagreement is the evaluation of the company shares for the purpose of ascertaining any gains. There are different methods for calculating this, the choice of which to apply will be decided by a court if there is a dispute between the parties. Another frequent point of contention is the entrepreneur’s salary.
In addition to the equalization of accrued gains, pension rights adjustment is yet another potential source of conflict in the context of divorces involving an entrepreneur. Signing a prenuptial agreement is a possible path to avoiding disputes relating to either of these issues. A prenup can include tailored provisions that deal with the equalization of accrued gains, pensions rights adjustment, as well as other issues, and which deviate from the standard statutory arrangements. One thing that is crucial here is that neither spouse is allowed to be put at an unfair disadvantage, as clauses that have this effect are invalid.
Aside from a prenup, the couple can also opt for an agreement on the consequences of divorce, with this option also enabling the signatories to put in place important alternative arrangements. One advantage of this type of agreement is that it is also an option in the event that divorce proceedings are already underway.
For those who have any questions concerning prenuptial agreements or divorce more generally, they should look no further than the team of seasoned family lawyers at MTR Legal Rechtsanwälte.