Division of property of individual entrepreneurs during divorce

Division of property of individual entrepreneurs during divorce

According to the Family Code of Ukraine, the property acquired by spouses during marriage (common property of spouses) includes:

• income of each spouse from work;
• entrepreneurial activity;
• results of intellectual activity;
• pensions, benefits received by them, as well as other monetary payments that have a special purpose (amounts of financial assistance, amounts paid for compensation for damages in connection with loss of ability to work due to injury or other damage to health, etc.).

As a rule, the property of an individual entrepreneur is divided equally between the spouses, but there are cases when this is impractical or completely impossible, due to the fact that the business was gifted, inherited or formed before the marriage.

Joint property – movable or immovable objects of civil law circulation, purchased with common funds, as well as shares, deposits, and interests.

Family lawyer

Skryabina Darya Sergeevna

Candidate of Law

Hello! In this article I will tell you about the division of property of an individual entrepreneur during a divorce, what property of an individual entrepreneur is subject to distribution during a divorce of spouses, the division of business during a divorce between spouses, the procedure for dividing the property of an individual entrepreneur during a divorce, the division of loans of an individual entrepreneur during a divorce between spouses.

What property of an individual entrepreneur is subject to distribution in the event of a divorce?

IP – is an individual entrepreneur who has been registered in accordance with the procedure established by law. He is liable to creditors with the property that he owns. As a rule, in case of divorce, everything that belongs to the businessman is divided equally between the spouses. An exception is the case when there is a marriage contract that determines a different procedure for distributing property.

The entrepreneur may own:

1. shops, tents, trade pavilions or other premises;
2. goods purchased for sale;
3. equipment;
4. transport.

Division of business during divorce between spouses

However, if the business was created before the marriage was registered, then it will not be divided upon divorce, it will remain with the man who created it.

The division of the business can be made with the consent of the parties, namely the wife and husband draw up and sign an agreement on the division of common property, everything acquired is divided in accordance with the wishes of the spouses. If no understanding was found between them on this issue, then the judge will make the division in equal shares.

However, there is an exception when the entrepreneur’s property can be left to him, but he in turn must compensate the other spouse for the value of such property. This applies in exceptional cases.

The property of an individual entrepreneur is not subject to division upon divorce

According to the general rule of Ukrainian legislation, all property acquired during marriage by spouses is divided in half upon divorce. This clause also applies to business and everything connected with it, but there are exceptions:

• creation of an individual entrepreneur before marriage, that is, the property, including the business, is not divided between the spouses if acquired for the registration of family relations;
• receipt of property under gratuitous contracts – donation or inheritance;
• the right to claim under a loan agreement issued by an entrepreneur during marriage is not divided between the spouses. According to established judicial practice, a man or a woman is not a party to such an agreement, therefore, she does not have the right to demand partial fulfillment of the obligation in her favor. As a rule, the common property includes income from an individual entrepreneur, which is invested in the needs of the family, the rest belongs to the businessman himself;
• if the property of a spouse engaged in entrepreneurial activity is seized due to the fact of collection of tax payments, then at the request of the wife or spouse who received a part of such an item during the distribution, his part can be exempted from this. Such a restriction through seizure is associated with the activities of an individual entrepreneur and the personal obligations of the entrepreneur, for which collection can only be applied to his personal property;
• a pavilion or tent belonging to an individual entrepreneur remains the property of the entrepreneur himself during the division of property, which in turn compensates the other spouse/from this business. This happens when it is inappropriate to divide such items, since their distribution will complicate or make it impossible to carry out the business.

The procedure for dividing the property of an individual entrepreneur during a divorce

None of the family people are immune from problems, including divorce. According to the family law of Ukraine, the shares of the spouses in the distribution of the business are equal. The peculiarity of the status of an individual entrepreneur is that the property is not divided into private and is found in this activity, therefore, under its obligation, it is liable with all its property.

The procedure for dividing jointly acquired property by spouses, including IP:

1. by agreement: if the parties have come to a common opinion on the division of common property, on the distribution of shares, in the event of signing such a document, the state, represented by the judge, does not interfere in the distribution of items between the spouses;
2. by court order: is used if the spouses could not agree on the division of property, there are issues that they are unable to resolve on their own;
3. by marriage contract: if it exists, there is no need to consider the claim for division in court, as well as to conclude a transaction.

Filing a claim for the distribution of IP may be carried out by either spouse, regardless of who is the initiator of the divorce. All claims must be substantiated and proven by the plaintiff, and the defendant, in turn, puts forward arguments regarding the claims.

Division of loans of individual entrepreneurs in case of divorce between spouses

According to Ukrainian law, the debts of a man who is a businessman are divided during a divorce in proportion to the shares received from jointly acquired property; this rule applies not only to the OP.

In order to divide the obligations related to entrepreneurial activity, it is necessary to find out where the income received from the individual entrepreneur in the form of cash goes. If for common needs, the spouses are jointly and severally liable, and after the dissolution of the marriage in proportion to the share of the property received.

Example

After twenty years of marriage, the Semenov spouses Artem and Valeria decided to dissolve their marriage. During the marriage, the man created his own business, namely, he opened several shoe repair shops in the city. In the course of his activities, Artem took out a loan to expand his private enterprise.

When dividing jointly acquired property, he filed a claim for the division of this debt. However, Valeria, in turn, denied it, claiming that the loan was a personal obligation of the former spouse, and she wanted to receive the assets of the individual entrepreneur, since they were purchased during the marriage.

The court satisfied Artem’s claim, due to the fact that the jointly acquired property includes all income, as well as obligations to fulfill, debts and debts of one of the spouses of the businessman.

Property of an individual entrepreneur: division during divorce

All property received, including income from business, is the joint property of the spouses and must be divided. In this case, it is necessary to take into account some features of this type of property:

• in this case, income is recognized, reading profit, namely the difference between revenue and invested funds;
• the court, when dividing property, also takes into account income that will be received in the future, namely contracts concluded by an individual entrepreneur during the marriage, payment for which will be made in the future;
• when making claims for part of the spouse’s business, it is necessary to remember that business debts, as a rule, are also divided between the spouse. Especially in the case where the income was spent on family needs.

Family lawyer

Alexey Nikolaevich Skryabin

Doctor of Law

Our many years of experience in the legal field is a guarantee of your success: this is what you need now to solve your problem.