Divorcing if you own your own business: this is how it works

Try to keep the lines of communication with your ex-partner open and make clear arrangements. Two things are important in this situation:

1. What is the legal status of your marriage or partnership?
2. What is the legal structure of your business

1. Legal status of your relationship

The official status of your relationship determines how you divide your assets and debts in the event of a divorce.

Married: prenuptial agreement or community of property

A prenuptial agreement sets out how you and your partner will divide assets and debts in the event of a divorce. These arrangements are set out with a civil-law notary when you get married. Check the terms of the agreement to see what you have agreed regarding your business.

Prenuptial agreements often include a settlement clause. This is about dividing income or assets during your marriage and in case of a divorce. It is important to know whether the arrangements in this settlement clause were followed during the marriage. If not, it could affect the division in a divorce.

For example, you have a BV. The settlement clause states that you must share the profits with your partner every year. But in practice, you leave the profit in your BV instead of distributing it. Then your partner is still entitled to their share upon divorce.

Did you marry before 1 January 2018, and you did not draw up a prenuptial agreement? Then you are married in community of property. All assets and debts belong to both of you. Including your business.

Married since 2018: limited community of property

Did you marry in or after 2018 and you did not draw up a prenuptial agreement? Then you are married in limited community of property. Only the assets you built up during the marriage belong to you together. Assets and debts you already had before the marriage are not joint. 

If you already had a business before your marriage, then it is private property. But you may have to pay compensation to your partner in case of divorce for the assets you accumulated with your business during the marriage.

Registered partnership

A registered partnership has the same legal status as a marriage so the same conditions apply on separation. The only difference between a registered partnership and marriage is the method of ending it. If you are married, you must go to court to divorce. For a registered partnership this is not necessary unless you have children.

Cohabitation contract

Do you and your partner have a cohabitation contract? If so, check what agreements it contains about joint assets, joint debts, and sharing pensions.

2. What is the legal structure of your business?

The legal structure of your business is important in a divorce. The consequences of a divorce for private property and liability for the 3 most common legal structures are:

Divorce and sole proprietorship

Private ownership: Your business is yours, but the value of your business falls into the community of property. This means that your partner is entitled to half the value in the event of a divorce. Unless there are prenuptial agreements. Or if you married in limited community of property in 2018 or later.

Liability: The owner of a sole proprietorship is personally liable for all debts of the company. If you are married in community of property, your partner is also liable. Your partner’s liability ends at the time of divorce.

Divorce and general partnership (VOF)

Private property: If you and your partner have a general partnership (VOF) together, the value and assets of the business fall into the community of property. Unless there are prenuptial agreements.

Liability: The partners are personally responsible for the debts of the VOF. Your ex-partner may decide to leave the VOF if you divorce. In that case, your ex-partner will only be liable for debts incurred whilst they were a partner.

Divorce and private limited company (BV)

Private property: The shares in your private limited company (BV) determine the value of your BV and must be shared with your ex-partner in the event of a divorce. Unless, of course, you have made different arrangements in a prenuptial agreement

Different arrangements may have been made in your prenuptial agreement. Are you married under a system where only what you acquire during the marriage becomes jointly owned? If so, you will often have to compensate your partner for your BV.

If your partner is a shareholder and wants to sell the shares, they must first offer them to you or other shareholders. Unless the BV's articles of association do not require this.

Liability: Shareholders of a BV are not personally responsible for the debts of the company. Liability is limited to the amount they have invested in the company. This limited liability does not change after divorce.

Buying out your partner and the value of your business

If you have to buy out your partner, the value of the business will determine the amount you have to pay. So it is important to know what your business is worth. An accountant can help you determine this. You can agree with your ex-partner to pay that amount in instalments to keep your business financially sound.

Help with divorce

When you get divorced, you have a lot to deal with. You can seek help from a mediator to set out agreements in a divorce covenant. In the covenant, you also record what happens to the business. This can remain private property, but detailed agreements are needed on this. For example, on the value of compensation for your partner.

Do you have questions aboyt the consequences of divorce for your business? Contact the KVK Advice Team. Together, we can explore your situation and see how we can help you further.