Family expert, Zoe Bloom explains how business owners might benefit from seeking counsel in the context of their private lives, particularly in relation to marriage, cohabitation or other important financial arrangements.
Death and divorce are the most common occasions when an individual needs help from a lawyer. It is usually in these circumstances that solicitors are given their first, and often only, opportunity to review an individual’s life.
Solicitors see many problems which could have been avoided. However, without prior access to our clients’ affairs, solicitors have no opportunity to identify potential issues and suggest solutions in advance. The result is that, when life takes a stumble in the wrong direction, the magnitude of the problem is often greater and the solution is more expensive than it might have been.
Few sophisticated clients would embark on a new business venture, employ someone new or take any important business decision without first ensuring their position is entirely protected. So, why do people marry, cohabit or enter into other financial arrangements with family members without first seeking advice?
Protecting the cohabitant
If you live with your partner and the relationship ends, problems can arise which can result in a dispute regarding:
- ownership of the house;
- occupation of the house;
- ownership and use of possessions and bank accounts; or
- care and access to children.
Protection is available in the form of a cohabitation agreement and deeds of trust, both vital pieces of armour in the event of a breakdown in the relationship.
If it is too late to put these in place, cohabitants who are separating should seek to have any agreements set out in a contract or separation agreement. This can include details such as when the children will be visiting which parent or that there will be no attempt to change their names.
Protecting the married
A marriage agreement, whether it is made before (prenuptial) or after (postnuptial) the marriage ceremony, should be viewed as an essential piece of legal insurance as the courts are increasingly likely to implement the terms of a properly made agreement.
The most common agreement states simply what each member of the couple brings into the marriage and agrees that anything that they make during the marriage, unless it is given to them or inherited, will be shared equally between them in the event of the marriage ending. Even if the agreement is deemed unenforceable, the process of having properly documented the assets at the outset of the marriage can be enormously helpful in the event of a divorce.
An alternative and popular arrangement is where a business asset is ring-fenced from any future divorce proceedings, but the lower earning partner (assuming there is one) is given reasonable provision from other assets if they are available. This type of agreement can be invaluable in small businesses where other shareholders are anxious to make sure that the business is adequately protected.
Nobody escapes the need for proper documentation. Whilst everyone knows that they need to have a will, too many people still do not have one.
Failing to set out your wishes in respect of your finances can result in your money passing to people that you would not choose as recipients.
Neglecting to set out your wishes in respect to your children can result in your children being cared for by people who are not suitable guardians. You can even use the will to document why you do not think a previous spouse would make a suitable guardian in the event of your death.
A do-it-yourself will is a false economy. Badly or incorrectly drafted wills can and do result in disputes at a time when a family should be offering one another comfort and support.
Whatever your age, you should also consider making a lasting power of attorney, particularly if you run a business. This enables you to appoint someone to look after your affairs and make decisions on your behalf if you lose the ability to do so. You might be injured whilst travelling overseas or you could become ill at home. Either way, your family should know who can arrange for the mortgage to be paid.
Doing it right
As Mae West said, "A dame that knows the ropes isn’t likely to get tied up." Grasping the various ropes of your own life, understanding how they tie together and ensuring all the loose ends are neatly taken care of will benefit the whole family.
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.