Separation Agreements – 5 Reasons Why Family Enterprises Require Special Attention
When the decision-makers of the family enterprise realize that their domestic relationship is breaking down balancing the family’s transition with the needs of the business is a tough act. Taking a collaborative approach to resolving the legal issues arising at separation bodes well for the ongoing health of the business. Here’s why.
- Emotional suffering distracts from and interferes with the ability to logically process all the rights, benefits, and obligations flowing between the spouses and their children at this time of family transition. Making competent decisions for the family’s future requires a clear focus and sufficient information to make those decisions while maintaining the family enterprise.
- The benefits of working out the challenging issues together in the safe environment of a collaborative family law approach permit effective, creative, and custom resolutions safeguarding future family relationships. One family’s separation may ripple on to extended family members whose business contributions are invaluable and worthy of continued respect. Containment and control over the preliminary stages of separation set a mutually beneficial direction for the best outcome for the family and the enterprise.
- Accountability and care not to discredit each spouse’s contribution to the generation of wealth over the course of the relationship are one of the first steps. The private handling of the family’s legal issues arising from the breakdown of their personal relationship away from the public preserves the dignity of in-laws, employees, and their children.
- The young family members stepping into the business are learning and gaining insights from the intergenerational family dynamics nurturing the family enterprise. Important negotiations about divorce issues should be handled away from the children. However, such negotiations should also be inclusive of select corporate advisors to ensure the strategic coherence of advice being mindful of succession planning for the ongoing welfare of the company.
- An independent valuation of the business ensures that an unbiased report for the benefit of the spouses and their families will be unassailable down the road. While knowledge sharing of the financial circumstances and relationships of the business are invaluable from corporate insiders, gaining full disclosure upfront dissipates fear and builds trust. Moreover, it generates the confidence to resolve what may present as an initial imbalance of knowledge and position permitting the spouses to develop a bespoke separation agreement.