Bremer Advokater


Divorce – How to deal with the division of your company

In case of divorce, the starting point is that the parties must share half of their positive net worth with each other - this also applies to the parties' companies. Divorce can therefore have major financial consequences for the company owner, and the equal division can also have a decisive impact on the continued existence of the company.

Sharing the estate

The Danish marriage rules mean that you automatically get a shared estate when you get married. This means that in the event of the marriage ending, the parties must share their assets equally with each other. However, you have the option of creating a prenuptial agreement on separate property if you do not want this equal division in the event of a divorce. In the vast majority of cases, this will ease the estate division process, as there will thus be no basis for discussing the company's valuation, which is often a point of contention between the parties.

Should the company be withdrawn?

The spouse who owns the business must decide early in the estate division process whether he or she wants to withdraw the business - that is, take over the assets. The first question that arises in this regard is typically what value the company has, as the value will be included in the sharing of the estate, with which the owner must pay an amount to the other spouse corresponding to half of the company's value if the company is taken out. The question of selection thus requires that the company is valuated if the parties cannot reach an agreement on the company’s value. The parties must agree on the principles for the assessment. However, the overall baseline is that the assessment is made on the basis of the company's sales value to third parties in a cash transaction. It is important to be aware that the value of the company must be recorded with the value that it is assessed to have at the end of the division of the estate, or at the time of withdrawal of the company, and therefore not the value on the termination date. This follows from Section 28 of the Spouses Act (Ægtefællelovens § 28)

Can the business owner change their mind?

Several different circumstances can cause the owner to change their mind about whether they want to withdraw the business. One could, for example, imagine that at a later stage in the sharing of the estate, the owner obtained the bank's approval to withdraw the company (which could not be obtained previously). It may also prove difficult to sell the business at the estimated sale price, which is why it may be necessary to set a lower sale price, which may, however, give the owner the financial opportunity to sell the business themselves. Often, the parties will have opposing interests in when the company's value is calculated, and one party may therefore have an interest in delaying the decision of withdrawal. However, such a form of speculation over a longer period of time, with the intention of speculating in whether the company falls or rises in value, is not possible. This would be contrary to the purpose of the Spouses Act, according to which the parties must decide at an early stage whether they wish to withdraw the assets that can be agreed upon.  

BREMERs recommendation

Sharing of estate often includes many assets, and it can therefore be difficult for the owner to assess at an early stage whether he or she wants to withdraw the company. It is often a question of finances, which first and foremost requires an overview of the estate's total assets and liabilities. We therefore always assist our clients in making an estimate of the result of the estate settlement, so that an overview can be created of what amount the client can expect to have to pay to the other party, including if certain assets are withdrawn. In this way, we assist our clients in being able to safely assess whether they wish to take the company out.

Date: 03/09/2021, 01/02/2023

Authors: Line Stecher and Alexander May-Worre

Translation: Asger Søderberg

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