Marriage and business: how to protect assets from BSM risks

Do you know what all belongs to the community property after the wedding? And what happens to your business if a crisis comes? Marriage is not only an emotional commitment, but also a legal institution that fundamentally changes the way property is handled. We often only realise this when unexpected situations arise – divorce, accident, business failure or even bankruptcy. At Highgate Estate Vault, we believe that preparedness is the key to protecting both family and business.

In this article we will show you:

• how matrimonial community of property (BSM) works in Slovakia,
• which assets belong to the community property and which remain exclusive,
• what it means for entrepreneurs, business owners and investors,
• what tools exist to protect assets during marriage.

What is BSM and why is it important for entrepreneurs

In Slovakia, the principle of joint ownership of spouses (BSM) applies. This means that all property acquired during the marriage belongs to both spouses jointly – without determining the share. They both have equal ownership rights to the property that falls under the BSM.

When is BSM created?

• on the date of the valid conclusion of the marriage (not before or after),
• automatically, by law – no agreement is needed,
• lasts until the marriage is dissolved (divorce, death) or until it is annulled/modified by the court.

What belongs to the BSM?

• wages, business income, dividends,
• movable and immovable property acquired during the marriage,
• savings, investments, securities,
• the value received from the sale of common property.

What does not belong in the BSM?

• property acquired before the marriage,
• property acquired by inheritance or gift,
• items serving only personal needs (e.g. personal jewellery, an artist’s musical instrument),
• items obtained in restitution,
• copyrights, e.g. works, intellectual property, but beware: the income from their sale is already part of the BSM.

Business and marriage: where do the risks arise?

If you are a partner in a company, the rights of a partner belong exclusively to you – not to your spouse. However:

• the economic value of the business share (i.e. its price, earnings, dividends) during the marriage belongs to the BSM,
• the spouse’s consent may be required for the transfer of the share to another person (if the disposal is of joint property or if the partnership agreement so provides).

Example from practice

The entrepreneur entered into the marriage as a 100% partner in the company. The company is “his” but:

• any dividend paid during the marriage already belongs to the BSM,
• if the business is sold during the marriage, the proceeds of the sale are shared,
• on divorce, the wife can claim half of the value of the share acquired during the marriage.

Options for the protection of matrimonial property

Many entrepreneurs mistakenly rely on the so-called “prenuptial agreement”. In Slovak law, this institute does not exist in the form we know it from abroad. However, there are other ways:

1. Agreement on the reduction/extension of the BSM

• is concluded by notarial deed,

• the spouses can agree that e.g. income from a business will not be part of the BSM,

• applies prospectively, retroactive exclusion of assets is not possible.

2. Agreement on the creation of BSM on the date of dissolution of the marriage

• during the marriage, each has separate property,

• on dissolution of the marriage, the property is counted and divided,

• suitable for entrepreneurs who want flexibility during marriage.

3. Judicial annulment of BSM

• possible for compelling reasons (e.g. one spouse’s business, risk of debt, gambling behaviour),

• the application may be filed by the spouse who is not in business or is at risk,

• the court decides on an individual basis – it is not an automatic judicial procedure.

Saboteur husband? What if the business is compromised during the marriage?

Divorce can be a lengthy process. Until the marriage is formally ended, assets remain in the BSM and the other spouse may need to be involved in business decisions.

If cooperation is impossible and threatens the business, it is possible:

• file a petition for dissolution of the BSM with the court (e.g. if the other spouse acts against good morals or puts the business at disproportionate risks),
• prepare for property settlements through expert reports and legal representation.

How to do it practically?

• map your assets – which assets you own, which belong to the BSM,
• consider a BSM agreement – preferably right after the marriage,
• Think through the business structure – a holding company, trust, foundation can provide protection,
• don’t wait for conflict – a preventive setup is always cheaper than litigation.

Estate Vault – protecting your assets for every life situation

Whether you are preparing for marriage or already running a business during the course of it, Estate Vault can help you set up both legal and financial structures to keep your assets safe.

• Individual consultations for entrepreneurs and investors,
• Protection of the company from the consequences of BSM,
• Practical solutions for families with different assets.

Don’t wait for unpleasant situations. Book a consultation and get a checklist of steps to protect your business from the risks of marriage.