Division of property after divorce - how to divide the company?
Divorce has a number of different consequences, including financial ones. If the former spouses were engaged in a joint business activity, the separation may require them to take appropriate steps, especially with regard to the company's assets. How in such a situation to make a correct and quick distribution of funds? The article will present the division of property after divorce.
Division of property after divorce - financial consequences
One of the main effects of divorce is the cessation of statutory marital property rights. This takes place when the court judgment declaring the dissolution of a given marriage becomes final. The cessation of statutory commonality automatically results in the joint ownership of property between the divorced, in place of the current joint commonality.
Divorce and termination of joint property causes the necessity to divide the joint property that has been accumulated throughout the duration of the relationship. However, such a situation does not arise when the marriage was in force from the very beginning under a property separation regime, i.e. when both the husband and wife had their personal property at their disposal.
We should remember that statutory marital property co-existence arises with the conclusion of the union - it is done by the law itself. If the parties are interested in separation, they must conclude an appropriate agreement in the form of a notarial deed, known as an intercourse.
The Supreme Court's judgment of 5 October 2016 (file reference number III CSK 382/15):
Upon the termination of the marital commonality, joint ownership is transformed into fractional joint ownership, to which the provisions on joint inheritance apply accordingly, while property and property rights acquired by spouses after this legal event are no longer subject to the regime of joint property, which means that they increase spouses' personal property. In certain cases, however, after the termination of the marital commonality, the co-rights of the spouses (ex-spouses) in fractional parts (e.g. when the specimen of a specific property right arose during the duration of the marital cohabitation, while the final right created on the basis of this expectation has already been implemented) after the termination of the marital cohabitation).
After the joint property ends, the spouses generally have equal shares in the property to be divided. Therefore, the disposition of an object that is an element of joint property requires the consent of the other spouse to be valid.
If the spouse, after the termination of the joint property, purchases the property with money constituting the joint property, the other spouse is entitled, in the case of the division of joint property, to award an amount corresponding to his share.
Division of property after divorce - company property
Running a joint family business is very often associated with obtaining common income and bearing the costs of such activity. In the event that one of the spouses is an entrepreneur (runs a registered business), and the other has no employment or works full-time (or under a civil law contract), the best solution is to establish property separation before the company is established.
In this case, separation of property protects the other spouse (who is not an entrepreneur) against liability for the debts of the husband or wife. In the event of a divorce, it significantly simplifies the settlement of financial matters between the parties - then there is no need to divide the company's assets (the enterprise belongs to only one person and is not part of the joint property, but part of the entrepreneur's personal property).
The problem arises when the property of the company is shared, i.e. both spouses ran a given enterprise, or one of them did it, but no separation of property was ever established, and the company was established after the wedding. In this case, the company's assets are included in the joint property, which - as we already know - ceases by operation of law when the judgment dissolving the marriage becomes final. As a rule, this necessitates the division of such property. Divorced people may, however, decide that they will continue to run a joint company, and the division of its assets is not necessary at all - such situations are unfortunately rare.
We should remember that the income obtained from the gainful activity of each spouse is included in the joint property - the company's assets must therefore be considered broadly. It will include not only the rights and material things that make up the enterprise, but also the income that it generated during the marriage. If the parties do not wish to divide such property in the event of divorce, it is necessary to establish the aforementioned separation of property.
Division of property after divorce
If the enterprise was run by both spouses, when they both financed it, or the company was established after the wedding, and the relationship was governed by a community of property regime, it will be necessary to divide the company's joint property after obtaining a divorce. Theoretically, you can apply for the division of property in a divorce petition, but it is not a good idea. Courts are reluctant to divorce while dividing the parties' assets, as it significantly extends the time of the proceedings. It is definitely a better idea to get the divorce first and then do the dividing formalities.
The division of property can occur in two different ways:
by concluding a contract in the form of a notarial deed - this option is faster, but requires the full consent of the divorced as to the method of dividing the company's assets;
by obtaining a court judgment dividing the property - this method unfortunately takes much more time (proceedings of this type last about 2 years, sometimes even much longer), but it occurs when the parties are unable to agree with each other on the division of joint property.
Division of property after divorce - costs
The division of joint property does not only include the property of the previously run company. The legislator requires that such activity be complete and cover all elements of the divided property. When deciding on a notarial or court division of joint property, the parties must remember that after concluding an appropriate agreement or obtaining an appropriate judgment, they will not be able to divide the assets they have forgotten earlier.
It must therefore be very accurate to determine the assets to be divided. There are practically never situations where there is a division of property related solely to running a given business. Should such a situation occur, the parties will lose the option to divide the remaining joint assets that were not related to running a business at all.
Regardless of the form of the planned division, the parties must remember about the necessity to count all components of joint property, including company property. However, each division involves mandatory fees that will be paid either to a notary public or to a competent court.
In the case of a notarized division of property, the parties are obliged to pay a notarial fee, the amount of which depends on the value of the divided property (the greater the property, the more you will have to pay at the office). The ordinance of the Minister of Justice of June 28, 2004 specifies the maximum notary fees depending on the value of the subject of the contract (in our case, the value of the marital property):
if the divided property has a value of up to PLN 3,000 - it will cost PLN 100;
above PLN 3,000 to PLN 10,000 - PLN 100 + 3% of the surplus above PLN 3,000;
above PLN 10,000 to PLN 30,000 - PLN 310 + 2% of the surplus above PLN 10,000;
above PLN 30,000 to PLN 60,000 - PLN 710 + 1% of the surplus above PLN 30,000;
above PLN 60,000 to PLN 1,000,000 - PLN 1,010 + 0.4% of the surplus above PLN 60,000;
above PLN 1,000,000 to PLN 2,000,000 - PLN 4,770 + 0.2% of the surplus above PLN 1,000,000;
above PLN 2,000,000 - PLN 6,770 + 0.25% of the surplus above PLN 2,000,000.
However, the above amounts are not the only costs that the parties must take into account. Each time, VAT is added to them in the amount of 23% and the costs of copies of the notarial deed in the amount of PLN 6 + VAT for each page of the extract.
The issue of costs is somewhat different when the division of property is made in court. In this case, the parties are obliged to pay a court fee in the amount of PLN 1,000 - regardless of the value of the divided property. However, if they submit an application that includes a compatible division project, the court fee will be only PLN 300.
Division of property after divorce - summary
The division of the company's assets after divorce is necessary when the parties ran a joint venture or both provided for its maintenance. It will be similar when a marriage was governed by a system of statutory unity. In this case, the divorced may divide the property before a notary (faster, but more expensive option) or before the court (longer, but cheaper option). The divided property must, however, take into account not only the value of the enterprise, but also all components that were not related to the conduct of a given business activity, and which were also included in the joint property of the spouses.