Family law for entrepreneurs with Marcus Bäckström at Simple Law

In this film with Marcus Bäckström from Enkla Juridik, you can find out more about family law for entrepreneurs.

Contact Marcus and his colleagues if you are in need of legal advice.

kontakt@enklajuridik.se
020 - 89 95 96
Enkla Juridik Sverige AB
Industrivägen 23
171 48 Solna

Transcript for The Movie

What family law rules are important to consider?

Most fundamentally, if you run a business and are married, without a prenuptial agreement, the shares in the business are marital property. The implication of this is that if you were to separate or if you were to die, the main rule is that the shares are to be included in a partition. In practice, this means that you will have to share your company. This has consequences for other stakeholders in the company as well. So that's the most important thing to understand.

That business, just like a car, money in an account or property, is also part of the marital community.

How to proceed?

It's actually very simple. There are, of course, lawyers who charge good money for it. But basically, you just have to write a document stating that you do not want the rules of the Marriage Code to apply. Then it can be all the property. That no matter what, it should not be included in any future partition. In that case, there will not be any division, because there is nothing to divide. Or you could draw up a list stating that the shares in, for example, Nisses Måleri AB are excluded from the division of the estate. So it could be everything you own or just a part.

Then it must be signed by the respective spouse. It must also be registered with the Swedish Tax Agency to be valid and it costs 275 SEK or similar in administration fee. So it's not a high threshold to arrange this, if you like.

How to draw up a settlement agreement?

It is compulsory if you are divorced and do not have a prenuptial agreement. Unlike if you are cohabiting. If you are cohabiting, you do not have to make an amicable settlement. But it is only if someone explicitly requests it. But if you separate or someone dies and there is a marriage, then you have to make a settlement. It's really just an agreement setting out what each person has in assets and liabilities.

An overly simple example is that a person has a million kronor in an account, but otherwise no assets at all. Nor any debts. While the other person has zero crowns and no debts. In that case, the amount to be settled is the one million kroner in one person's account. Since the principle is that it should be divided equally, one person must transfer half of the money to the other. Then it's really done.

But it can be extremely complicated, especially in cases where companies are involved. Because if you have an unlisted company, which most people do, it can be a bit difficult to know what these shares are worth. It can depend on a variety of factors. It's a fairly common dispute, I would say.

If there is no prenuptial agreement, those who do not own a business want it to be valued as highly as possible. While the person who owns the shares wants to push the valuation down. That could be a problem.

So if you don't own Nisses Painting but your name is Jeff Bezos, who owns Amazon, and you're getting divorced - what advice would you give him?  

I wish I could have given him advice now that he was getting divorced, that would have been wonderful, because I'm sure it was very well paid! But you could say it was too late in his case. Because he started his business in the 90s and couldn't expect to be the richest person in the world, could he? It's perhaps natural that the prenup didn't slip through the cracks.

If you find yourself in a situation where it is already too late, because you cannot draw up the marriage contract retroactively, then my advice is to be humble, willing to compromise and constructive. Don't try to start a war against your former partner, but try to resolve it in a decent way for both parties. That's where you might need a little help with mediation.

In my experience, if you go in and are firm, it is often counterproductive. Because then you create a bad atmosphere and then it might take two years to solve it instead of two months.

Are there any risks in having a partner on the board of the company?

Yes, I would say so. It's very common for partners to be deputies in limited companies. Which in itself is not so bad because a deputy does not serve in the name of the company, so to speak. So I guess that's okay.

I don't think you should put a partner as a full member of a board if you need more members for some reason. Because if you're a director of a company, you're taking on quite a lot of responsibility for the business. Because if you are unlucky, go bankrupt and incur tax liabilities, not only will you be affected, but so will your partner.