Without an agreement the community of accrued gains applies (section 1363 German Civil Code). For a company that is the critical point: the value sits in the business, the claim arises in euros. A prenuptial agreement operates at three points: the property regime and the pension rights adjustment (section 1408) and post-marital maintenance (section 1585c).

Anyone who excludes the statutory regime ends up with separation of property (section 1414): no equalisation, in either direction. In the community of accrued gains the surviving spouse's statutory share of the estate is increased by a flat quarter (section 1371(1)). With separation of property that increase falls away. Changing the property regime therefore always means taking an inheritance law decision as well.

The standard case in business owners' agreements looks different: the property regime stays, the participation stays, and only those points are changed that become dangerous to the business in a divorce. That is the more durable variant, because it has a visible logic.

Taking the shares out has to be described precisely

What is taken out is not “the company” but a named list of assets. A workable agreement states which shareholding in which company is meant, whether shares acquired in future are covered, and what happens to substitutes. If the shareholding is sold, there is suddenly money in the private account, and without a clause that money falls into the equalisation.

What should deliberately stay in is whatever has flowed into private assets: distributions, drawings, the securities portfolio financed from them, the property. The operating assets stay untouched, and the spouse participates in everything that has grown out of them privately. Take everything out instead and you have agreed separation of property, merely using another word for it.

Clauses on the increase in value decide the rest

The second question is what happens to the increase in value during the marriage. Four routes are common: taking the shares out entirely including the increase, fixing the value, capping, or sharing only the real increase. Fixing the value: the shareholding stays in the equalisation, its value at the date of the marriage or of the agreement is recorded in the agreement, and only the increase is shared.

Every one of these variants needs a valuation clause, otherwise the agreement merely relocates the dispute. Payment terms belong in it as well: the size of instalments, due dates, interest and security. Anyone disposing of their assets as a whole needs their spouse's consent (section 1365 German Civil Code). In a modified equalisation of accrued gains that requirement can be contracted out.

Maintenance and the pension rights adjustment belong in it, in moderation

Post-marital maintenance can be regulated. An agreement made before the divorce becomes final has to be notarially recorded (section 1585c German Civil Code). Care maintenance for a child of the marriage (section 1570) can hardly be contracted out effectively, and separation maintenance cannot effectively be waived for the future in any event. What does work are limits on amount and duration.

The pension rights adjustment can be regulated or excluded by prenuptial agreement (section 1408(2)). An exclusion without consideration is one of the most frequent breaking points. Anyone who wants it agrees, for example, separate pension provision for the spouse. A capital payment or a share in a property can also serve as compensation.

Prenuptial agreements are examined in two steps. The validity review looks at the time of conclusion: an agreement that distributes the burdens of the marriage in an evidently one-sided way, with no objective reason for it, can offend against public policy (section 138 German Civil Code).

The exercise review looks at the time of the divorce: a valid agreement can be adjusted where relying on it would breach good faith (section 242).

Both are ordered by how close the matter lies to the core of the consequences of divorce, the so-called core-area doctrine: the equalisation of accrued gains is furthest from it and therefore the most freely arranged, while the pension rights adjustment and care maintenance lie at the centre and tolerate little interference. What makes an agreement durable is that it can be followed: the company is protected, and the spouse receives something concrete in return.

Many articles of association require shareholders to have a matrimonial property arrangement, sometimes with a duty to prove it to the company. Others restrict the transferability of shares, prohibit pledges or cap settlement payments. I read those clauses before drafting a prenuptial agreement, because they determine what may be agreed at all. Where matters move into company law drafting, I bring in the appropriate specialists.

Added to that is the comparison with the testamentary disposition. The prenuptial agreement, the will or contract of inheritance and the articles of association are three documents concerning the same shareholding that can cancel each other out. A prenuptial agreement that takes the shares out of the equalisation while the will assigns them to a community of heirs does not solve the very problem it was written for.

In a funding round investors examine the shareholder structure. An open matrimonial equalisation claim is a risk at that point and ends up in the term sheet. Before the round the shareholding is worth little and the arrangement is easy to negotiate. After the round the same arrangement is a waiver of a visible amount.

Anyone marrying as a founder should therefore record the value at the date of the marriage in the agreement, even if it is close to zero. That very zero is gold later: it evidences that the entire build-up falls within the marriage, and it is what makes fixing the value verifiable in the first place.

The more frequent case is not the agreement before the wedding. People marry without one, later they found a company, inherit or take over a shareholding, and at some point a bank, a fellow shareholder or the tax adviser asks about the matrimonial property position. A prenuptial agreement is possible throughout the marriage, in the same form (section 1410 German Civil Code).

First, there are figures: the value at the date of the agreement can be established, and the arrangement can separate what exists from future growth. Second, you are negotiating within an existing marriage in which both know what has been built. The closer the agreement is concluded to a separation, the stricter the review will be.

An agreement from 2011 knows your sole proprietorship, not the holding company with two subsidiaries. It knows two working spouses, one of whom now works part-time. The passage of time alone does not change a prenuptial agreement, but it does increase the likelihood that it will be corrected through the exercise review when it matters.

That is why a review clause with named triggers belongs in the agreement: the birth of a child, one spouse giving up work, a change of legal form, the acquisition or sale of shares, a move abroad, the start of a succession plan. An appointment every few years costs an hour. An agreement that topples costs a shareholding.