The financial settlement after a divorce is one of the most complex and significant parts of the entire process. It involves not only the division of shared assets and the settlement of debts but also the determination and allocation of various forms of financial support. Child maintenance and spousal support play a crucial role, as well as specific arrangements for entrepreneurs, the implications of existing marital agreements, the division of real estate and business assets, and the revision of maintenance in the event of changed circumstances, such as the cohabitation of an ex-partner. Finally, pension equalization or settlement is an essential component that impacts the future financial security of both parties. A thorough and careful approach is required to ensure that all agreements are fair, transparent, and aligned with the current financial reality.
1. Child and Spousal Maintenance
Child maintenance is primarily intended to cover the costs of the care and upbringing of children. The amount of this maintenance is determined based on the specific needs of the child and the income of both parents, with the contribution of any caregiving institutions often taken into account. In principle, the non-custodial parent is obligated to pay maintenance to the parent who primarily cares for the children, and this obligation typically lasts until the child turns 18 or until 21 if the child is studying or is not yet able to support themselves financially. On the other hand, spousal maintenance is meant to temporarily support the financially weaker ex-partner in building an independent life after the divorce. Factors such as the length of the marriage, the standard of living during the marriage, and the degree of economic dependence are considered when calculating spousal maintenance. These arrangements are carefully recorded to ensure that both ex-partners, and particularly the children, are not harmed financially after the divorce.
2. Business and Maintenance
When one or both ex-partners are entrepreneurs, this adds an additional complexity to maintenance calculations. Entrepreneurs often have fluctuating income consisting of various components, such as a management fee, business profits, dividend distributions, and other profit-sharing. This variable income structure makes it difficult to establish a fixed and representative income, as is typically the case with salaried employees. When determining maintenance, not only the current income is considered, but also the value of the business and its future profitability. It is essential to involve external expertise, such as accountants and business valuation specialists, who can use actuarial methods and market analyses to conduct an objective and accurate valuation. This expert evaluation prevents irregularities in business operations or temporary fluctuations from leading to an disproportionately high or low maintenance obligation and ensures a balanced settlement.
3. Marital Agreements
Marital agreements play a central role in the financial settlement during a divorce. These pre-established agreements determine how shared assets and income will be divided in the event of a divorce. Specific arrangements are often made, such as excluding certain incomes or assets—such as business profits or business assets—from the shared division or including offsetting clauses to ensure that any remaining funds are fairly distributed. However, over the years, the original marital agreements may become outdated or no longer fully align with the current financial situation. Changes such as the growth of business profits, new investments, or a shift in labor distribution can lead to ambiguities regarding what exactly is meant by “income” or “assets.” Therefore, it is crucial to periodically review marital agreements, preferably in consultation with a notary and a financial expert, to prevent future conflicts and ensure that both parties remain protected.
4. Division of Property, Business, and Other Assets
The division of shared assets is often the most complicated part of the divorce process. This not only includes real estate, such as the shared home, but also business assets, shares, bank balances, pension rights, and other financial assets. The value of these assets must be accurately appraised, taking into account not only the current market value but also the method of acquisition and the investments made during the marriage. This may require specialized appraisers or business valuation experts to obtain an objective valuation. Depending on the agreements, various methods can be applied, such as a direct division of the assets or an offsetting clause, in which all assets and debts are combined, and a compensation amount is determined. The ultimate goal is to provide both parties with a fair and balanced division based on their actual contributions and the value growth during the marriage.
5. End of Maintenance Due to Cohabitation of Ex-Partner
An important factor in the financial settlement after a divorce is the possible adjustment or termination of maintenance when an ex-partner moves in with a new partner. New cohabitation circumstances can significantly improve the financial situation of the ex-partner who was previously receiving maintenance. This may mean that the original maintenance arrangement is no longer appropriate, and that maintenance must be adjusted or even terminated. The law provides for this possibility, but the process requires careful legal scrutiny and a thorough evaluation of the changed financial circumstances. In such situations, it is crucial to involve a lawyer to ensure that the revision of the maintenance obligation is carried out transparently and fairly, and that both parties can proceed with a reasonable amount.
6. Pension Equalization and Settlement
Another important component of the financial settlement during a divorce is the division of pension rights accrued during the marriage, known as pension equalization or settlement. Both partners have accumulated pension rights during the marriage, and these must, in principle, be divided equally to ensure that both parties have proportional financial security in later life. There are two main methods to achieve this: direct transfer of pension rights and financial settlement, in which the value of the pension rights is determined and settled in cash. The choice of the appropriate method depends on various factors, including the type of pension fund, the agreements in the marital contract, and the wishes of both parties. It is vital that the pension settlement is carried out with the utmost precision, as incomplete or incorrect calculations can lead to long-term financial disadvantages for one of the partners. Expert guidance from financial and legal professionals is essential to ensure that the pension rights are divided in a transparent and equitable manner.
