The early stages of a family breakdown often prompt unsettling questions for separating spouses. Most people want to minimize the disruption and protect their legal and financial rights.
Often, they will begin a frantic search online for credible information about the divorce process, such as who pays the expenses, what funds go into joint accounts and when to move out of the matrimonial home. Unfortunately, many mainstream articles suggest steps that will only make separations more acrimonious and costly.
To achieve healthier divorces, spouses need accurate information that highlights best practices to minimize the negative impact separation can have on the entire family and any family business. Advisors are well-positioned to provide this information in consultation with appropriate legal professionals. Here are five moves to make when clients tell you they’re separating.
1. Promote personal well-being
A legal separation is one of the most difficult life events to experience. People don’t know how to stop feeling the way they do, how to deal with their new financial reality, how to talk with a separated spouse (when communication wasn’t great to begin with), how to deal with the pain of not seeing their kids daily, or how to be a good separated co-parent.
Therefore, it’s important to invest in acquiring new skills before the divorce is finalized, such as how to become more aware of yourself – your needs, how you deal with conflict, how you respond to situations that make you angry or sad, how to improve your communication and interpersonal skills.
Those who connect with the abundance of professionals available in this space end up feeling better, faster. Prepare a list of local therapists, family counsellors, social workers and other professionals who may be able to assist clients.
2. Protect any children
Parents should educate themselves on best practices before having any separation-related conversations with the children, or within their earshot. Children also often need help or support when there is a separation, and it’s important that any professionals provide age-appropriate counselling or advice. But not all kids, especially teenagers, agree to meet with such professionals. If that’s the case, provide literature on provincial and federal government websites such as parenting workbooks and educational resources, which contain credible and balanced information. One example is the Department of Justice’s resource page.
Families also benefit from working with social workers or mental health professionals to develop new communication skills and establish a personalized parenting plan. Working through the process together makes it easier for parents and kids to keep relationships intact.
3. Determine living arrangements
When spouses decide to separate, it can take time to organize their affairs and physically move apart. That can make the transition period extremely challenging for the entire family.
Some couples are able to cohabitate peacefully while the legalities get worked out. However, even in acrimonious situations, lawyers sometimes tell people not to move out until a written parenting agreement is in place. That’s because the spouse who stays in the matrimonial home may have an advantage in the parenting schedule.
Once the separation has been announced, spouses who continue to share a residence should work together, with professionals if necessary, to create a transition and exit plan as soon as possible. They may agree on alternating bedtime duty so each parent can go out separately to alleviate tension, what those bedtime routines look like, who takes the kids to programs, and how to communicate with each other. This will help maintain a healthy environment for any children, for whom things are likely confusing and difficult, even if there’s a semblance of peace.
4. Preserve the family business
The business is both an asset and an income source for the family – sometimes for more than one generation. But upon separation, people can deliberately or inadvertently cause harm to the family business.
The best practice is for spouses to work together on a transition and exit plan by agreeing on who continues to work in the business, how to transition their roles with staff and suppliers, and how to make property and support payments that take into account the business cash flow and development needs. Clients should also take into account existing shareholder agreements and consult a tax specialist to ensure the transition is tax-efficient.
5. De-couple finances
There is often confusion about how to handle joint accounts, including where a spouse’s pay should be deposited post-separation, and who pays what expenses. This is a delicate topic that needs to be discussed with lawyers. In general, it is best not to unilaterally rush into separating the finances, especially during an emotional period. It’s more effective when both parties make plans together, when cooler minds prevail, with the help of lawyers and financial planners.
While a number of articles may recommend that one spouse quickly empty joint accounts and cut off credit cards, this is not only irresponsible but can also cause irreparable harm. The spouse at the receiving end of these tactics could hire an aggressive lawyer and respond with equally hostile and unfair moves. This only starts a downward spiral that keeps families in conflict for years.
Best practice is for spouses to act co-operatively. They should fund joint accounts and make all regular family payments in the same manner as before separating, and start the process of untangling in consultation with both lawyers and spouses. Separations are often more successful when both spouses are knowledgeable about their finances and work together to build a vision for their newly separated lives.
When it comes to life and health insurance, clients should not change or remove their beneficiary designations without first obtaining legal advice, particularly since most separation agreements and court orders provide for continuation of life insurance regardless.
Couples who are separating have countless questions about their rights and obligations, and getting informed answers will usually reduce tensions and stress. Clients should seek legal advice quickly, and if they want to take a more co-operative approach, they can consider a lawyer trained in collaborative law. Strategic first steps such as the ones outlined here can help avoid turning a divorce into a war.
Nathalie Boutet is a family lawyer, mediator and certified Family Enterprise Advisor™ specializing in high-net-worth families and business owners. She can be reached at firstname.lastname@example.org.