Here are some very good reasons to stick to the high road; for one, consider what the children will remember
Originally published on Canadian Family Offices on August 31, 2022
Article written by Diane Jermyn on Canadian Family Offices.
When Jen Lawrence’s divorce clients behave badly, sabotaging their own family’s interests to hurt their spouse, she asks them this question: Who’s making this decision?
“Is this your angry 12-year-old inner child with abandonment issues trying to punish this person for never being home for dinner?” Lawrence says. “Or is this an adult who’s trying to build a legacy for their kids who might work in the family business one day? Try taking that step back.”
Bad behaviour never pays, however tempting it may be, says Lawrence, who is a certified divorce coach, divorce financial analyst and master life coach based in Oakville, Ont. In fact, when both sides take the high road for the sake of the business and the legacy they may want to leave behind, divorce can work surprisingly well, she says.
But for wealthy individuals and their families, the stakes are high, especially when a business is involved.
Lawrence says a lot of her clients haven’t been active previously in the family business and may find that suddenly in divorce, they’re now a 50-per-cent owner of a substantial company. For some, it’s a great opportunity that can change the direction of their lives. How involved that person wants to be, however, all needs to be negotiated as part of the divorce settlement.
“For a person newly coming into the business, I always recommend a business coach, someone who can help them enforce business boundaries,” says Lawrence. “It’s important not to let anyone rush your decisions, even to delaying decisions until you’ve met with your advisors. If you’re a 50-per-cent partner with voting rights, they have to listen to you.”
If both members of the divorcing couple were active in the business, Lawrence suggests they take the same approach that they would in co-parenting their children.
“There are cases where both sides continue to be good business partners because, like co-parenting, they have this joint interest,” says Lawrence. “Both want the business to thrive, just like you’d want your children to thrive, and both will profit from that. It’s easier to take that mindset because otherwise someone has to buy the other person out.”
“The nice thing about money is you can hire teams for advice – financial coaches, relationship therapists, people who deal with family businesses – who can come in and help mediate some of the tougher issues.”
Divorce coach Jen Lawrence
That can get tricky, Lawrence notes. Just because a business is worth $10 million on paper doesn’t mean you can get $5 million out of it immediately. The money may be tied up in a building or a fleet of trucks.
“It can also be challenging for the person who’s been running everything up until now, because suddenly they have a partner who may not be particularly silent, especially if there’s been infidelity or hurt feelings,” says Lawrence. “You don’t want to be bickering during meetings with investors or customers.
“The nice thing about money is you can hire teams for advice – financial coaches, relationship therapists, people who deal with family businesses – who can come in and help mediate some of the tougher issues that they don’t feel comfortable discussing themselves because it may get personal and emotional.”
‘Get your advisors lined up’
Nathalie Boutet, a collaborative family law lawyer, certified mediator and certified family enterprise advisor, says the best practice is for everybody to stay as calm as possible – including calm for the advisors and for family members around the divorcing couple who may be fueling the dispute.
“There’s a lot of confusing information on the web about changing your beneficiaries, bank accounts and all the passwords,” says Boutet. “That’s only in extreme cases. For the majority, it’s just regular folks that are separating, and no one intends to harm the other.
“Stay calm, get your advisors lined up and find out what you need to feel safe and protected, but don’t start the next war, because if you do, the other person is immediately going to become defensive and retaliate.”
Boutet advises that the person with more power – the one who’s in control of the money – should make sure that all the systems that were in place previously continue uninterrupted and to reassure the other person that payments will be maintained until all this is resolved legally and collaboratively. So now there’s money in the account to pay the bills and for the kids’ sports camps and dentist appointments.
“It sounds silly, but what makes people nervous is if their lives and current lifestyle are impacted at the moment,” say Boutet. “Don’t use the most aggressive approach because all you’re going to do is make this fight longer and more expensive. That’s why we say, be very careful how you start out these negotiations. Then get whatever support you need for self-preservation – counselling, meditation, yoga, whatever works for you – and get really good personal support, because it’s going to be difficult, even if it’s amicable.
“The other thing is to educate yourself. There’s a lot of people who don’t know about their finances or the law, so get your advisors sooner than later.”
Keep things private
Boutet believes that going to court is not necessary for the majority of cases. With collaborative negotiation and mediation, you’re more in control of trying to craft a solution that fits your family life.
“If you don’t go to court, everything is private,” Boutet advises. “In court, the decisions are published and financial statements are available to everybody. Who would really want that?”
Carolyn Cole, founder and CEO of Cole & Associates, consultants for family offices across Canada, observes that while she sees a lot of short-term decisions being made in the middle of divorces, consideration regarding the long term impact on the family is often overlooked.
“Most families experiencing divorce are in the midst of managing a very fresh wound of some type, so the immediate reaction is to address matters in the present,” says Cole.
“What’s rarely discussed in the drafting of divorce papers or settlement agreements is that how people are treated in the process has a direct impact on how the rising generation will forever view their family members, wealth, future and legacy.
“Divorced families with affluence are far more complicated because the grown children are likely to be bonded together over business matters or family money with the same family members who treated their mom or dad a certain way.
“This is forever ingrained into the lens of their family and enterprises, so it’s not just a divorce. It’s also foreshadowing the legacy and self-worth of a family.”
Interference from family and friends
Another challenge that Cole has seen many times is that even when a divorcing couple tries not to make it about the money, often their friends and family do.
“Money is the easy spot to go to in times of tension,” says Cole. “Parents really need to put their long term lens on and reflect on what they took away from their childhood as a significant memory.
“Now think about what your children are going to remember about the circumstances and behaviours of the adults around them, and how that will positively or negatively impact them, because money amplifies everything.”
