Advantages of Marital Agreements for Entrepreneurs

by | Jul 29, 2014

Marital agreements help entrepreneurs to safeguard themselves and their families against any claims from third parties. They can be also useful to protect their company in the event of a divorce, and in the event of their death or incapacity to act.

What are the advantages of marital agreements for entrepreneurs?

Entrepreneurs want to safeguard themselves and their families against any claims from third parties. They also wish to protect their company in the event of a divorce. And, furthermore, they would like to be in control of what happens to their company, not only today, but in the future, in the event of their death or incapacity to act.

Swiss family law offers entrepreneurs a powerful management tool in the form of marital agreements. Each individual case has to be analysed with regard to its specific aims and framework conditions. The objective is a personalised solution that takes account of the individual needs of the entrepreneur.

Swiss matrimonial property law provides for three property regimes:

  • The Marital Property Regime of Participation in Acquired Property, as the statutory type of regulation.
  • The Separation of Property.
  • The Community of Property.

The Separation of Property and the Community of Property can be substantiated via a marital agreement. Marital agreements require notarisation in order to be valid.

Participation in acquired property: During the existing marriage, the assets, debts, income and expenditure of the spouses (apart from those for the joint household andthe fulfilment of the duty of matrimonial support) are kept separately.  In the event of the termination of this regime due to divorce, the assets accrued during the marriage will be shared fifty-fifty between the spouses respectively the heirs.

In the case of companies this can lead to illiquidity and pose a threat to a company’s continued existence. In order to avoid this, a pre-existing company can be transferred to the entrepreneur’s individual property. This means that the entrepreneur’s spouse no longer has any claim to it.

Separation of property: In the event of a divorce, each spouse retains whatever property he/she brought to the marriage. In the event of the death of a spouse, the property succession is exclusively subject to the rules and provisions governing inheritance.

The transferral of companies, property and other assets to the individual property of one spouse is becoming increasingly possible within the community of property (however, this is not effective in the case of divorce). Companies and other assets can also be shifted to the common property of both spouses under the community of property provision and be transferred to the surviving spouse by way of inheritance with effect in rem.

However, the community of property is only to be recommended if neither spouse has any personal liability risks. It has the advantage, which should not be under-estimated, that the surviving spouse receives the company or shares in the company directly as property by way of inheritance and can compensate the co-heirs in another way, according to his/her choice. This then avoids a state of limbo in the property and controlling interests following the death of an entrepreneur.

marital agreements

Nico H. Burki

Burki Rechtsanwälte