Nuptial Agreement – Why you need a nuptial agreement

Nuptial agreement / cohabitation agreement (if you’re not married)

If you are married and the love doesn’t last you must, in the event of a divorce, share your wealth with your spouse. As of January 1st, 2018, this type of agreement has been called sharing assets.

This is done by listing your assets and liabilities I.e., deeds, registration certificates, bank accounts, etc. If you have more debt than assets, the fortune is set at 0 DKK, and you do not hand over anything to your spouse. Instead, you’ll have half of your spouse’s wealth and if none of the spouses have positive wealth, they will leave the marriage with their own debts. If the marriage has lasted several years and there is a big differentiation in the spouses’ income and the prospect for a reasonable livelihood, the financially strongest can be sentenced to pay spousal contributions, which is becoming more and more rare.

If you want to avoid giving over half of your property, you can enter into a prenuptial agreement, which is a contract / agreement between spouses, where you decide who owns what. You write it down and then the document gets registered, so the agreement is final and can’t be disregarded. In the event of a divorce, you keep your separate property out of the division. One can agree on full separate ownership or partial separate ownership, where for instance only a single asset is described, and the rest must be settled in the event of a divorce.

There are many situations where one should enter into a prenuptial agreement. After all, the primary reason is to avoid handing over half of one’s fortune in the event of divorce. This could be, because there is a big difference in the wealth of the spouses. One may have inherited and bought a house, or you might buy a house together and one spouse is making a large cash payment. The distribution of the prenuptial agreement can be altered and agreed upon later in the marriage by entering into a new agreement.

If you are self-employed, it is the net worth of the business that is included in your assets and must be shared with your spouse in the event of divorce. This ALSO applies if it’s only you who works in the company and have done so long before you met your spouse. Without a prenuptial agreement, you’ll have to pay half of the net worth to your spouse. If you can’t pay the money, you may be forced to sell your business (if the business is a farm, you may be forced to relocate). It’s expensive – and you’ll have to start all over again. Meaning, that it can target the self-employee’s workplace, so that in the event of divorce, the self-employed can end up unemployment, whilst the other spouse simply continues working undisturbed.

Therefore, you should protect your business through a prenuptial agreement, so you avoid losing your business and job. You can write everything down in the contract, so you know what you own, and you only have to share what is described in the agreement. Shareholding can also be described, also if one decided to sell the shares and buy new ones – the new shares will also be separate property, just as income from separate property also remains separate property. This is called separate property surrogates.

It may also be that both you and your spouse have built a business together and it is therefore quite reasonable to share it between you. Most are competent with sharing after 20 years of marriage, but don’t think it is reasonable after 5 years. The practice for short-term marriages (2.5-3 years) is that you do not share anything, corresponding to full separate property. You take what you brought with you and only share what you possibly have created together.

 

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