The property of the spouses has been regulated in Germany by the Zugewinnausgleichsgesetz since 1958. Under this law, each spouse leaves with the assets he or she had at the time of marriage, as well as with the assets he or she acquires during the marriage.
But what happens if one spouse establishes a business during the marriage and declares this business to be his or her own property? Who then benefits from the added value of the company?
This question arises in particular when there is a separation or divorce. What happens to the company? Is there a right to share in the added value?
The answer to these questions depends on various factors, such as the legal form of the company and the nature of the marriage, as well as the specific situation in each case. In this article we would like to take a closer look at these factors and show who benefits from the added value of a company in a spouse’s own estate.
Legal situation
The business in a spouse’s own property presents a complex legal problem. The added value of the business can be considered as joint property in marriage. This means that in case of divorce, the added value must be shared between the spouses.
However, there are some exceptions. If the business was built up exclusively by one spouse and the other spouse did not contribute to it, compensation may be required from the non-participating spouse. It is also possible that the business is considered as a so-called special property of one spouse and thus does not fall into the equalization of gains.
It is therefore advisable to seek legal advice when setting up the business and especially before getting married, in order to avoid possible pitfalls and to create a clear arrangement in case of divorce.
Advantages for the owner of the personal property
The business in a spouse’s personal property can provide numerous benefits to the owner of the personal property. First, the business provides an additional source of income that is independent of other sources of income. The owner-manager can thus benefit from the security and stability of the business.
Another benefit can be tax savings. The owner of the personal property can deduct the expenses of the business from his or her taxes, resulting in a lower overall tax burden. In addition, the business can serve as an asset and thus have a positive impact on the financial situation of the owner of the personal property.
Furthermore, the owner of the personal property has full control over the business and can thus make important decisions that can have a positive impact on the development of the business. The owner-occupant has greater freedom to make decisions in this regard than in a joint business with multiple partners.
In summary, having a business in a spouse’s own estate has numerous advantages for the owner of the own estate. From additional income and tax savings to control over the business and an asset, the business can have a positive impact on the owner-occupant’s finances and standard of living.
Possible problems for the spouse
If one spouse owns a business in his or her own estate, this can lead to conflicts within the marriage. On the one hand, the spouse who runs the business may do most of the work and bring home most of the income. As a result, the other spouse may feel that he or she is not valued enough.
On the other hand, the other spouse who is not involved in the business may feel that he or she does not have enough influence over the decisions of the business. If the spouse who runs the business makes important decisions, this can have an impact on the entire family. It is important that both spouses agree on a common approach to avoid such conflicts.
Another issue that may arise is who will benefit from any value added to the business. If the business was created during the marriage, it may be considered joint property. However, if it was established before the marriage, it is the property of the spouse concerned. It is important that both spouses, and possibly an attorney, agree on a common approach to how any added value can be divided if divorce should occur.
- Some possible solutions to these problems may be:
- – Communication and openness between both spouses
- – Agreeing on a joint approach to important decisions
- – A written agreement about the possible added value of the company in case of divorce or separation
Implications in a divorce case involving a business owned by one spouse
A divorce case can have far-reaching implications, especially if the business is owned by one spouse. In this case, the question arises as to who benefits from the added value.
In Germany, the principle of "Zugewinngemeinschaft applies in principle, which means that assets acquired during the marriage are shared. If the business has significantly increased in value during the marriage period, this can lead to a complex legal situation.
In the event of a divorce, all assets, including the business, are first listed and valued. If the business is owned by only one spouse, a settlement payment may have to be made to the other spouse in order to share the asset fairly.
It should be borne in mind that the actual added value of the business is not always easy to determine, as it is not always directly attributable to the contribution of one spouse. If both spouses are involved in the management of the business, this can make the valuation even more difficult.
Conclusion and recommendations
Having intensively studied the case of the business owned by one spouse, we can draw the following conclusion:
- There are several legal requirements to consider in order to run a business owned by a spouse
- The division of profits between the two spouses can be problematic
- An amicable settlement between the spouses may be advisable to avoid complications
- It is advisable to consult a qualified attorney to take the proper steps
As a recommendation, therefore, we can state that it is important to make a clear and mutually agreeable arrangement from the very beginning in order to avoid disputes and to run the business successfully. It is advisable to regularly divide the finances and profits of the business and to be transparent about the spouse’s share of ownership.
In summary, it is possible for a business owned by one spouse to be successful if all legal requirements are met and there is a clear division of profits between the spouses.