MenuThere is ultra-high net worth – and then there’s the other universe the likes of Elon Musk, Jeff Bezos and Bill Gates operate in. Domestically speaking, this world was rocked recently when Gates, who is worth about $128.3 billion, announced he was to divorce Melinda, his wife of 27 years.
One can only guess at the number of professionals that gathered around the table to thrash out the terms but Nathalie Boutet, Toronto family law lawyer and family enterprise advisor, told WP that the separation threw up a number of issues that advisors should be aware of when dealing with wealthy divorces.
Clarifying that she can only speak, by law, directly about Ontario jurisdiction, the first obvious point is that the Gateses separation agreement was done privately.
“The most important thing, not just for rich and famous people, but really everybody is that people should want to resolve their disputes privately,” Boutet said. “It’s only when they can’t come to an agreement and someone goes to court, that’s where their affairs become public. Most people, however, should be able to resolve their disputes with the right group of advisors.”
For a financial advisor, the division of assets and the wellbeing of a couple’s children are pillars of the process. For business owners, an exit plan is required, which may involve a settlement involving families shareholding together. As an advisor who knows the family’s finances, their knowledge is crucial.
They are unlikely to be the only person around the table, though, especially if, as likely, both parties are represented separately.
Boutet said: “It takes something to take the family from point A to point B, but one of the best systems for this is called collaborative negotiation where it’s built around a team that supports the family. It is a really awesome system. I checked the lawyers for the Gates family and they don’t seem to have that that qualification or that collaborative training. But it looks like they were able to find a way to collaborate and to make an agreement that would respect their privacy and their shared goal to continue their mission.”
Boutet also reminded advisors that the first steps in a divorce can be vital for the process. Often this is complicated by the amount of inaccurate information on the internet. Couples should not shut or empty joint accounts, for example. Being aggressive from the off means it will be hard to stabilize the team around the couple.
If everyone from the get-go is respectful, it helps set the pattern of behaviour. This may be easier for those with a lot of money, because everyone will still be comfortable, but trust is a central issue regardless of net worth.
“In most cases, the team of professionals, including their financial advisors, should really be bold and say, ‘What are you doing? It’s not going to help you to take these aggressive steps’. I’m not saying that people shouldn’t protect themselves. Most people have worked really hard to preserve their wealth and they want to find a solution that will work for both parties.”
A divorce will also reveal how much attention the advisor gave either spouse. Have they been including the wife, for example, in discussions as much as the husband? Often times, one of the spouses will leave for another advisor. Statistically, this is likely to be the woman, who has no relationship with the male advisor.
Boutet said: “It’s important for all wealth advisors to incorporate all of the important people in their thinking, not just taking advice from the man. Sometimes it’s hard because it depends on how their relationship is structured. If the woman really has no involvement in that relationship [with the advisor], then it’s hard for the advisor to build a relationship.
“But if you’ve not built a relationship with the other spouse, it’s likely that other spouse will leave and go somewhere else.”
Originally written by James Burton on Wealth Professional.