Business and marriage are two important life decisions that are often more intertwined than many realize. If you are planning a wedding and also own a business or a share in a company, you should beware, without the right setup, your business may automatically fall under the community property regime (BSM). In practice, this means that in the event of a divorce, the business may be subject to division, litigation or even jeopardise its operation. This is why it is crucial to address asset protection before entering into marriage. There are legal and effective tools, such as narrowing the BSM or properly setting up the ownership structure of the company, which can minimize risks and ensure the stability of the business in personal life as well. At Highgate, we specialize in strategic business protection and help clients set up legal solutions to keep their business safe at all times. If you want to make sure your business is not compromised by life’s unforeseen situations, this article will show you what to look out for and how to prepare properly before your wedding.
When it comes to business, the question of what belongs to the community of spouses (BSM) is one of the most common and most underestimated topics. Slovak law is based on the principle that everything acquired by the spouses during the marriage belongs to the BSM, and to a large extent this also applies to business. Simply put, it is not only a question of whether the business itself belongs to the BSM, but especially the income that the spouse collects from the business.
The difference between an LLC and a sole proprietorship is crucial from the point of view of BSM.
s.r.o. (limited liability company):
Trade (self-employed):
The situation is different for a trade. A trade as such is not a thing to be owned, it is a licence to run a business tied to a particular person. That means:
In practice, therefore, it is not the trade but the results of the business that are shared.
Regardless of the form of the business, one important rule applies, the income and profits from the business during the marriage belong to the BSM.
This includes:
Even if the business is formally yours, everything you earn during the marriage is considered community property, unless otherwise provided for in the BSM. We know from practice that the biggest misunderstandings arise precisely because entrepreneurs think that the company is mine (I am only a partner in it), so it does not belong to the BSM.
But the reality is more complex:
This is even in cases where the other spouse has never run a business. We therefore recommend that you address business protection upfront. At Highgate, we can help you set up the BSM and business structure so that you have clarity before problems arise.
Slovak law defines exactly what does not belong to the BSM. In particular:
These exceptions are crucial, for example, when proving that the company was financed by one of the spouses’ own resources (i.e. money that did not belong to the BSM).
The share in a company is one of the most complex issues in the settlement of the community of spouses (BSM). In practice, a situation often arises where the share is formally registered in the name of only one of the spouses, but legally it may belong to the community of property of both spouses. The decisive factor is therefore not who is registered in the commercial register, but when and with what means the share was acquired.
Under Slovak law, a business share is part of the BSM if it was acquired during the marriage out of common funds or property created by the spouses’ common life. The formal ownership of one of the spouses is not decisive, the law follows the economic reality.
Typical situations:
In such cases, the other spouse is entitled to compensation for the value of the share, even if he is not registered as a partner.
There are also situations where a business share remains the exclusive property of one of the spouses, even during the marriage. The decisive factor is that it is an asset outside the BSM or there is a legal reason for its exclusion.
Most common cases:
In these cases, the business share does not belong to the community property and is not divided or its value is not settled in the divorce
Divorce brings many legal and personal challenges, and one of the most complex is the settlement of the community of spouses (COS). While the division of ordinary property tends to be relatively straightforward, the situation becomes significantly more complicated when a business or business share is part of the BSM. In such cases, it is no longer a simple division of assets, but a sensitive assessment of the value of the business, its operation and its future. From the point of view of Slovak legislation, not only the business share itself, but also its value, income from the business or property acquired during the marriage may be the subject of settlement. A company often represents not only a financial asset, but also a key source of income, the stability of the entrepreneur and its further development. This is why an incorrect or delayed BSM solution can lead to serious consequences, ranging from financial losses to a threat to the functioning of the business itself.
If there is no agreement between the former spouses within 3 years of the divorce, the court decides on the settlement. However, such a process is both time-consuming and costly and brings uncertainty that can negatively affect the operation of the company. In our experience at Highgate, these situations are among the most complex, especially when dealing with higher value, multi-partner or international businesses.
Pre-nuptial agreement in the true sense of the word still does not exist under Slovak law In Highgate we encounter a number of myths in connection with this issue, which often discourage entrepreneurs from solutions that can protect them. Let’s take a look at the most common ones. A quasi prenuptial agreement can therefore be regarded as an agreement between the spouses on the reduction of the BSM, which is permitted under Slovak law, but which can only be concluded after the wedding.
The prenuptial agreement is not about mistrust, but about responsibility and prevention. It is similar to insurance:
In business, it’s a complete standard.
In Slovakia, a quasi-premarital agreement in the form of a BSM narrowing agreement is fully legal.
He must be in shape:
It is legally enforceable and commonly used.
If it arises during the marriage, it can be part of the BSM. That means:
This is one of the biggest mistakes entrepreneurs make.
Formal ownership ≠ protection. Even if the company is written in one spouse’s name:
The legal relations and the factual situation are decisive, not only the registration in the Commercial Register.
Yes, it is possible to divide the BSM by agreement even on divorce, but in practice:
The best solution is to narrow the BSM during the marriage, i.e. before the divorce.
No. Narrowing the BSM makes sense for:
It’s not about the size of the asset, it’s about protecting it. And among other things, it’s also advantageous when applying for a mortgage.
Each case is individual. A poorly set-up agreement can:
Therefore, training is important and the law requires the agreement to be in the form of a notarial deed
Divorce can have a major impact on a business, especially if the business or its value belongs to the community of property (CPL). In such a case, it may become subject to property division, which poses a real risk to both the operation and ownership of the business. We know from experience that there are concrete and legal steps that can be taken to protect the company before a problem arises. Properly setting up the ownership structure, contracts and property relations can minimise risks and ensure the stability of the business even in the event of a divorce.
The most effective protection is prevention. In the form of a notarial deed it is possible to:
The result is that the company or business share remains outside the BSM and is not subject to division in the divorce. This is the most common solution recommended by experts.
There is no company like a company. For higher value business we recommend:
The advantage is:
At Highgate we also handle complex structures including, holding companies, offshore structures and funds.
A common mistake is for an entrepreneur to mix personal and business finances. Important:
Why:
The biggest mistake entrepreneurs make is that they only start protecting the company when there is a problem, such as a divorce. However, at that stage it is often too late, options are severely limited and the costs of dealing with the situation are rising. If you want to truly protect your business, it is crucial to act in advance. It is important to adjust the community of spouses (BSM) before complications arise, to set up the ownership structure of the company correctly and to have control over the financial flows. The combination of these steps can significantly reduce the risk of your business being compromised. At Highgate, we can help you set up a bespoke company protection, taking into account both Slovak and international law. Our goal is to protect not only your business, but also your assets and your future. It is better to deal with things today than to face losing your business tomorrow.
The settlement of the community of spouses (BSM) can take place in two basic ways, by agreement between the spouses or by a court decision. From the point of view of the Slovak legislation, an agreement is always preferred, but reality shows that, especially in business and companies, reaching a consensus is usually significantly more complicated.
If the spouses can agree, this is the most efficient way to settle the BSM:
In the case of a company or business shareholding, the agreement may include, for example:
At Highgate, we recommend looking for a deal whenever possible, especially with operating businesses.
If the spouses cannot agree or one of them disagrees, the court steps in. The court decides on:
In business, these are often complex proceedings involving:
Such proceedings are usually time-consuming and costly and can have a significant impact on the operation of the company.
Under Slovak law, if neither of the spouses submits a settlement petition within 3 years after the dissolution of the BSM (e.g. by divorce), the so-called statutory presumption comes into play.
That means:
However, this situation may not be advantageous, especially for companies.
Dissolution of the community of property (CoP) before divorce is an important legal instrument, especially in cases where the property includes a company or a business. Slovak law allows for the dissolution of BSM by court proceedings already during the marriage, especially in situations where one of the spouses is running a business, there is a risk of debt or there is a need to protect company assets. This is a strategic decision that can significantly reduce the risks before a conflict arises. From a practical point of view, although an agreement between the spouses seems to be the best solution, it is not always possible, and litigation involving companies is one of the most time-consuming and financially draining. A very common mistake made by entrepreneurs is inaction and not taking advantage of the legal possibilities in time, thus exposing themselves to unnecessary risk. If the spouses are unable to reach an agreement, the court makes the decision, which can lead to a lengthy process and potentially jeopardise the business. This is why it is crucial to think about prevention and setting up the right legal relationship in advance. If you need help protecting your business, setting up a BSM or resolving disputes, don’t hesitate to contact us at Highgate, we tailor each solution individually to ensure your business remains stable even in challenging life situations.
When settling the community of spouses (BSM), which includes a business, one of the key and most challenging steps is to determine the value of the company or business share. Unlike real estate or cars, a business share does not have a fixed price; its value is determined individually according to the company’s real economic situation. This is often the most contentious part of the whole process, as each party may have a different idea of how much the company is actually worth.
Slovak law does not prescribe one particular method of valuation. In practice, it is based on a combination of economic and accounting indicators that reflect the actual state of the company.
The main factors include:
The important thing is that it is not just about the numbers in the accounts, but about the overall economic reality of the company.
In case the spouses cannot agree, an expert’s report is almost always necessary in practice
It states:
The court relies on these opinions when deciding on the settlement of the BSM.
On the basis of the determination of the value of the company, the following can occur:
The goal is a fair equalization of value, not a physical division of the company.
One of the biggest practical problems is that a company has a high paper value but low liquidity.
That means:
This mismatch often leads to disputes or pressure to sell the company.
The valuation of a business interest is typically an area for conflict because:
This is also why it is one of the most complex areas in business divorces.
A business naturally brings not only profit but also debts and liabilities which can have a major impact on the settlement of the community of property (CoP) of the spouses. In divorce, it is not only the property that is divided, but also the business risk and financial obligations incurred during the marriage that are taken into account.
Under Slovak law (Civil Code), both spouses are generally liable for obligations incurred during the duration of the BSM. That is:
Especially in cases where:
There are also situations where both spouses are not liable if an obligation has been incurred:
in such cases, liability may be limited to the entrepreneurial spouse only.
For companies, we most often encounter:
The settlement takes into account:
The result may be:
If the spouses cannot agree on the division of the property after the dissolution of the community of property (CoH), a court solution comes into play. This is a formal process under Slovak law, which is often time-consuming and professionally demanding, especially if the property includes a company or a business share. How it works and what to prepare for.
The court proceedings are initiated by filing a petition with the competent district court. Important:
That means:
However, this situation may not be advantageous, especially for companies.
The proposal must be precise and supported by evidence. It shall include in particular:
In the case of business, the following in particular are key:
Without good evidence, the position in the proceedings is significantly weaker.
The court subsequently:
For companies, this often involves complex proof that can take months or even years. At the same time, the court tries to take into account:
The court can decide in several ways:
The aim is to strike a balance between the value of the assets and the realistic possibilities of the parties.
Legal representation plays a key role in court proceedings. Lawyer:
For companies, professional representation is practically indispensable.
It depends on when it was created.
Yes, but in a slightly different way.
Yes, and it is the best solution. The options are:
This is the most common solution we recommend in Highgate.
Yeah.
The sooner the better, ideally before the trouble.
In a divorce, it is resolved:
It’s not just about the company, it’s about its economic value.
Yes, and very often. Risks:
In practice, this can slow or paralyse a business.
This is often a point of contention in divorces.
The situation is even more sensitive.
The solution is to get the social contract right.
The most effective steps:
Each case is individual.
Let’s leave it at that, after all, nothing is going to happen. Reality:
Not in the strict sense of the word, but the law allows to narrow down the BSM immediately after the wedding:
Entrepreneurship and community of property are not just legal concepts; in practice, they determine whether your business remains stable or becomes embroiled in complicated disputes in the event of divorce. A BSM settlement involving a company or business share is one of the most challenging legal situations, involving a proper assessment of ownership, valuation of the share and resolution of liabilities. That is why it is crucial to think about protecting the business before entering into the marriage, not only when the problem arises. Getting the BSM, ownership structure and legal relationships right can eliminate risks, protect the value of the business and prevent conflicts that can jeopardize its operation. Every detail plays a crucial role, from the form of the agreement to its specific wording. At Highgate, we take a strategic approach to business protection. We do not offer one-size-fits-all solutions, but tailor legal actions to suit the needs of the client, whether they are classic LLCs, complex corporate structures, holding companies, or assets located abroad. We are also experienced in protecting assets within international structures, including jurisdictions referred to as tax havens, as well as the use of trusts and advanced wealth management tools. If you are in business and planning a marriage, now is the time to act. Contact our specialists in Highgate to set up protection for your business before you have to deal with it in a divorce.
If you are interested in this topic, please do not hesitate to contact us:
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