Do you suspect that your partner’s financial situation is unresolved, or do you not even have a very indicative overview of it? Is your spouse running a business and you are worried that you will be liable for any debts from the business with your own assets? How can you effectively protect yourself in such cases?
Several years ago, Mr. Robert contacted the firm of Affordable Advocate with questions regarding the appropriate legal form and the establishment of a travel agency. He was accompanied by his fiancée Eva, who supported her partner in everything, including his new business plan. However, as the more cautious of the couple, she also wanted to make sure that her (or rather their joint) assets would be safe, even if times were not in favour of the development of the travel agency or the business plan did not work out.
Therefore, in view of the planned marriage, we also advised the fiancés to conclude a prenuptial agreement, suggested its content and mediated its conclusion at a notary public’s office as provided for by law. Some time ago, we also received feedback on this case. Unfortunately, the era of covid lockdowns and travel bans favoured more established and stable travel agencies, which was not the case with Mr Robert’s agency. Travel around the world was made impossible, customers cancelled tours en masse, and Mr Robert found himself first broke and then in considerable debt. In retrospect, both spouses welcomed the tip that they had entered into a prenuptial agreement that protected their assets, including their shared home, from foreclosure.
Do you want to protect your partner from potential turbulence in your business?
Contact us and we will advise you on how you can secure your assets. We will prepare a prenuptial agreement for you and arrange for its legal form of notarial registration according to the law. All this within a few days.
Community property includes not only assets but also debts. Therefore, if you and your wife take out a loan or mortgage together, this liability will also be community property. However, a joint debt will also arise if only one spouse makes a commitment, for example, to buy a new television on hire purchase. If it is a really big commitment, such as a loan for a new car, and the other spouse had no idea about it and then did not agree to it, then such a commitment will be the sole debt of the spouse who made it (and has to pay it back out of his/her own funds).
Aprenuptial agreement is a document that can be concluded by the spouses, or in the form of a marriage contract, who wish to regulate whether they will have joint property as spouses and what will belong to it, or whether they will each have completely separate property. However, it really only concerns property. If it is entered into by the spouses, then it begins at the time of the marriage. A pre-nuptial agreement can not only narrow the matrimonial property but also extend it and choose who may dispose of the property and how.
Tip: we have discussed the general requirements and procedure for concluding a prenuptial agreement in our blog article.
It can happen to almost anyone if, for example, their business fails or they fall into debt due to other adverse circumstances. In the Czech Republic, the number of debtors and foreclosures continues to rise and, according to statistics, the number of prenuptial agreements is also increasing. If a person who owes a large amount of money or is directly affected by a foreclosure wants to get married in a given situation, the joyful moments of the other spouse do not have to be clouded by the vision of getting into a similar situation. The solution is a prenuptial agreement that protects the debtor’s partner’s assets.
Tip: Keeping careful records and hiding invoices and receipts is worthwhile for everyone. However, if you are entering into a marriage with a person who has debts or runs a risky business, really take this advice to heart. It may come in handy when you have to prove that you bought a particular item with your own money and that it does not belong to your indebted spouse or is not part of the community property. You can also prove the origin of cash in the household, for example by keeping a withdrawal slip from an account where you only have your own money.
In a situation where a prenuptial agreement is concluded primarily with regard to existing or potentially foreseeable debts, it may also be advisable to enter it in the List of Deeds on the matrimonial property regime. A notary public may register the agreement. The advantage is greater protection of the matrimonial property. In the event of an execution directed against one of the spouses, the executor must verify the existence of such a contract and be guided by its contents. Similarly, the validity of such a contract can always be invoked against third parties, even if they have not been made aware of its contents. The property of the other spouse is thus secured.
If you do not make the contract public, you should make third parties, and in particular the executor, aware of the contents of the contract and document the contract.
Tip: If you disagree with what the executor has included in the inventory, you can protect your property by filing a motion to exclude the item from the inventory. We discuss this topic in more detail in our article.
The relationship between the debts of one spouse and their payment by the other spouse has been dealt with by the Supreme Court in one of its judgments. It stated that “the purpose of marriage cannot be to pay the debts of the other spouse incurred before the marriage; the opposite would be extremely contrary to the principles of justice, since it would lead to an unacceptable strengthening of the creditor’s right at the expense of the debtor’s spouse.” Thus, if a creditor is recovering a debt which arose before the debtor’s marriage and has no claim against the debtor’s fiancé or fiancée at the time the contract is concluded, then his rights cannot be infringed or affected in any way by the conclusion of the prenuptial agreement. The Supreme Court has admitted that the protection of third parties from the conduct of spouses intending to diminish the rights of creditors is also undoubtedly legitimate, but there is no rational argument that the creation of a marriage should lead to the possibility of foreclosure also on the spouse’s property acquired before the marriage.
Tip: Some bailiffs try to recover the amount owed from any available assets, sometimes going beyond the limits of pre-nuptial agreements. This may also be an unconscious practice that does not distinguish between what is included and excluded from the community property. If the conduct in question continues even though the executor has been informed of the contents of the prenuptial agreement, we recommend prompt intervention with the help of a lawyer. If you want to know how the bailiff should proceed and what you can do if you disagree with his/her actions, read our article on the subject.
However, the law also remembers the rights of creditors. It tries to distinguish between the purposeful conclusion of prenuptial agreements. Under the law, if one of the spouses has committed himself/herself at a time when less than six months have elapsed between the change or exclusion of the statutory property regime (either by a marriage contract or also by a court decision), the claim of his/her creditor may be satisfied out of whatever would have been part of the community property if the marriage contract or the court decision had not occurred. Even if this is the case with regard to a creditor of one of the spouses whose claim arose before the modification of the community property, the contractual regime of the community of property is effective because its content and purpose do not affect his rights.
If you have found yourself in one of the situations described above and are now wondering what to do if you did not think of a prenuptial agreement when you were single, you need not worry.
As we mentioned above, even during the marriage a similar agreement can be concluded and the matrimonial property can be reduced. This cannot be done retroactively to the marriage, of course, but it will apply to any property acquired after the marriage.
Even if you do not have a similar agreement, neither spouse is liable for the debts of his or her spouse with his or her sole property (i.e. inherited funds, gifts or property acquired before the marriage).
We will prepare a premarital agreement tailored to your situation. We can prepare a similar agreement for you during the marriage and reduce the community property. All within five working days and at a predetermined price.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
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