How to divide businesses, real estate, and investments in a divorce
La liquidation of assets for high net worth It requires a much more rigorous analysis than that of an ordinary family estate.
When a marriage has accumulated companies, real estate of significant value, financial portfolios, shares in family businesses, assets abroad or complex asset structures, the division cannot be approached as a simple sum of assets and debts.
The legal basis remains the same: the community property regime makes common the profits or benefits obtained by either spouse and, once dissolved, its assets are divided in half.
However, arriving at that result requires first precisely defining what constitutes the assets, what should be considered the company's debt, and what credits exist between the separate property of each spouse and the community property.
In high-net-worth individuals, the core of the conflict is usually in the rating of the goods, In traceability of the money used to acquire or improve them and in the accurate valuation of assets that do not allow for a simple physical partition, as is the case with an operating company or a corporate portfolio.
Whoever plans that initial phase poorly is at a disadvantage from the start.
What does it mean to divide marital property when the assets are high?
It is important to distinguish between two moments that are often confused. One thing is the dissolution of the community property and another distinct one settlement.
El Civil Code It establishes that the company automatically terminates, among other assumptions:
- When a marriage is dissolved.
- When it is declared null.
- When the legal separation is agreed upon.
That does not mean that the assets have already been distributed.
From that moment on, the phase in which the marital property must be identified, the liabilities cleared, the reimbursement credits incorporated and the net assets to be divided between the spouses formed.
In a community property or separate property. With high net worth, this distinction has immediate consequences.
The fact that the marriage has ended It does not solve on its own:
- Who retains control of a company.
- How is the contribution of private funds to a common asset compensated?
- What treatment applies to investments acquired with mixed money?
The liquidation is the moment when all of that is legally ordered.
Separate property and community property: the true starting point
Article 1346 of the Civil Code list the assets proprietary of each spouse. Among them are those who:
- They already belonged to him when the society began.
- It is then acquired by free title, such as inheritance or donation.
- Purchased at the expense of or in substitution for private property.
Article 1347, for its part, considers community property Come on:
- Earned through the work or industry of either spouse.
- Fruits, income and interest from separate or community property.
- Acquired for valuable consideration using common funds.
- Companies and establishments founded during the existence of the company at the expense of common assets.
A property inherited by one of the spouses maintains, in principle, its character privateA different matter entirely is whether works, amortizations or investments have been made on that property with marital funds.
An society A business created before marriage may remain private in its origin, but the subsequent entry of common funds, the expansion of the business or the acquisition of new shares during the validity of the regime can open a much more complex discussion.
The same goes for investment portfolios fueled for years from accounts in which professional income, dividends and privately sourced funds have been mixed.
When separate and community funds are mixed
In high-net-worth individuals, the most intense conflicts tend to arise when the origin of the money is not linear.
The Civil Code expressly provides that acquired assets with a price or consideration partly marital property and in private part They belong jointly to the company and to the spouse or spouses in proportion to the value of their respective contributions.
Furthermore, when an asset retains its separate or community property character regardless of the origin of the money used to acquire it, the amount paid by the other estate must be reimbursed, updated to the time of liquidation.
Family businesses, shareholdings and going concerns
A company is the asset that least tolerates a hasty liquidation. A poorly planned distribution can drain a profitable business of its value, create corporate gridlock, or devalue the asset precisely when it should be preserved.
El Civil Code It recognizes each spouse's right to have preferentially included in their assets the economic enterprise they effectively manage and the premises where they have been practicing their profession, up to the extent of their share.
That legal criterion fits with a basic idea regarding high net worth; there are goods whose value depends on continuity of :
- His management.
- Maintaining control.
- Business stability.
That's why when the marital property This includes shares, equity interests, law firms, clinics, hotel operations, or holding companies; the liquidation must consider not only their theoretical value, but also the effect that each award would have on the actual functioning of the asset.
The legally correct distribution does not always coincide with the most economically sensible distribution.
What assets are included in the assets of the community property regime
Article 1397 of the Civil Code establishes that in the asset The following should be included:
- The marital property existing at the time of dissolution.
- The updated amount of the value of the assets disposed of through illegal or fraudulent business if they were not recovered.
- The updated amount of the sums paid by the company that were the sole responsibility of one of the spouses.
After making the legally applicable deductions, the remaining amount constitutes the company's assets and is divided in half.
This point deserves special attention when one of the spouses has operated with greater control over the family assets.
In high-net-worth individuals, it is relatively common to find an information asymmetry: one person knows the details of the companies, the accounts, the financial positions and the investment decisions, while the other only has a partial view.
The right to information, obtaining documents, and reconstructing the inventory are not minor steps.
Without that foundation, the abstract half recognized by law can fall far short of the real half of the common patrimony.
Division of marital property in international marriages or marriages with assets in several countries
In a high-net-worth international divorceThe division of assets cannot be examined solely from the perspective of the Spanish Civil Code. First, it is necessary to determine which law governs the matrimonial property regime.
El Regulation (EU) 2016 / 1103, applicable since 29 January 2019 in the Member States participating in the enhanced cooperation - including Spain -, deals with jurisdiction, applicable law and the recognition and enforcement of decisions in matters of matrimonial property regimes.
The regulation itself states that its scope includes both the day-to-day administration of marital property and the liquidation of the regime, and seeks to bring together in a single instrument the applicable rules to provide legal certainty to marriages with cross-border repercussions.
Cuando exists properties outside of Spain, accounts in other jurisdictions, societies foreigners or spouses With different nationality or residence, the most costly mistake is usually to argue about the division before having established the applicable law.
In these types of cases, the asset strategy begins with determining the court's jurisdiction and the applicable matrimonial property regime. Everything else is built from there.
Lawyers for the international liquidation of marital property
International divorces involving significant assets require precise legal planning from the outset. This firm handles a limited number of complex cases.
How to approach the division of marital property for high-net-worth individuals
In these types of proceedings, the division of assets should not be treated as a simple phase following the divorce. It is a matter in its own right.
demands a orderly review the origin of the assets, the flow of funds, the corporate structure, the charges, the taxation associated with certain awards and the impact that each decision may have on the conservation of the heritage.
A high net worth is protect with inventory, solid documentary evidence, technically defensible valuations and a clear vision of which assets should be allocated, which should be compensated and where there may be a reimbursement credit that substantially alters the final result.
That is the terrain in which a division of marital property involving companies, real estate, and investments It ceases to be a mere formality and becomes a matter of genuine legal asset strategy.
Conclusion
La division of marital property for high-net-worth individuals It demands technical precision from the very first movement.
The Civil Code provides the legal structure: it defines what is separate property, what is community property, when the partnership ends, what constitutes the assets, and how the assets to be divided should be formed.
What determines the economic outcome of the matter is something else: the ability to prove the origin of the funds, detect loans between estates, correctly value the assets, and design allocations compatible with preserving value.
These matters require legal judgment, economic knowledge, and a thorough understanding of the marital property structure.
FAQs
No, the Civil Code considers assets acquired by gratuitous title, such as inheritance or donation, to be private property.
If it is established during the existence of the marriage using community property, the law considers it marital property. If both separate and community property were used in its formation, the proportion corresponding to each asset must be determined.
Yes. The company's assets must include the updated value of any assets disposed of through illegal or fraudulent transactions if they have not been recovered, as well as any receivables owed by the company to the spouse who has charged their own expenses to the community property.
No. Divorce causes the dissolution of the regime, but afterwards it is necessary to carry out its liquidation, draw up an inventory, clear liabilities and divide the remainder according to the law.
Before dividing the assets, the law applicable to the matrimonial property regime must be determined. In matters with cross-border implications, Regulation (EU) 2016/1103 governs this issue and also applies to the liquidation of the regime.
RRYP Global, lawyers for the international liquidation of marital property and international divorce in Spain.
