Divorce Proofing the Family Business


(Last Updated On: July 5, 2021)

Breakups can taken an emotional and financial toll on the extended family 

Divorce or the breakdown of a relationship is an extremely emotional process. People are often confused, filled with fear and unsure of how to navigate the process. Their world is turned upside down, triggering unsettling and distressful emotions. The effects of the emotional distress and the impact on extended family can be devastating.

Close to 50 per cent of marriages in North America end in divorce. The divorce rateOpens in a new tab. rises to a staggering 60 per cent and higher for subsequent divorces by these same individuals. Clearly, we need to employ strategies that will get everyone, including those caught in the middle — often the children — off the “divorce-go-round” and on to a better life. We need to encourage healthy new beginnings, even when divorce looks like an end.

While divorce is often seen as a personal matter, when a Family Business is involved, divorce suddenly becomes everyone’s business. It is not uncommon for the effect of divorce to bog down the extended family unit, creating complications, reduced productivity, distress and even dissention amongst family members. And, while you might have many high net worth clients whose family businesses might be affected, a Family Business does not have to be a multimillion-dollar enterprise to be a concern to family members.  There are numerous family business that generate a more modest income, yet support a number of families within the extended family unit.

For most people going through divorce, the largest assets are usually the marital home, perhaps an Registered retirement savings plan, pension and some investments.  However, when there is a Family Business – that business is usually one of the largest and most significant (marital) assets.  And, it’s an issue whatever the position of the soon to be divorcee  — whether an employee, partner, participant, Board member, shareholder, or beneficiary.   It is not uncommon for a family’s wealth, net worth and income to be tied together, and the principal asset for all family members.

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Deborah Moskovitch

This blog post was written by Deborah Moskovitch the author of "The Smart Divorce", the catalyst for this website. This evergreen book covers how to manage the divorce process for a less painful result.

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