Bill and Melinda Gates ended their marriage but are trying to stay jointly involved in their $55 billion charitable foundation. There are many challenges for the Gates and couples who intend to work together in a charity or family business following a high asset divorce.
Typically, couples will end their business and philanthropic relationships with their marriage. But former spouses who remain amicable and share a common goal have a better chance of continuing these relationships.
When addressing business, it is important to work out what each spouse will own. Courts will consider whether the business was formed before the marriage, the marriage’s length, whether a spouse contributed to its formation and growth, and if it was formed when they were married. Courts will also review whether a valid prenuptial or postnuptial agreement excluded business assets, or if it was purchased with an inheritance.
If each spouse has equal rights to the business and stay amicable, they may continue to operate the business. They can buy out the other spouse’s interest or sell the business and invest the proceeds in their own ventures.
Couples who want to continue their business or charity while keeping some autonomy and independence have options. The business may be restructured so that each spouse stays involved or operates their own branch. Sub-funds may be created in a charitable foundation if the other trustees agree and if those funds are used to pursue charitable objectives.
This process should be like negotiating a prenuptial agreement where spouses must set forth their assets and objectives before they begin an important relationship. To avoid litigation, divorcing couples and their employees must be clear from the beginning about what will transpire, set forth their rights or obligations, engage in transparency and set a business or charitable goal.
Acting like the divorce never occurred and failing to plan for dispute resolution are common pitfalls. The distractions and emotions associated with ending a marriage are other common problems.
Couples should place the goals of the business or charity above their divorce. Decisions should be based upon the input of financial and legal advisors and what is best for the enterprise. Couples need to remain professional.
Locking out staff, retrieving office key cards and denying access to computers have been tactics used in other cases and which must be avoided. Tactics like scaling back on operations to show less income or delaying a major transaction to reduce business value should not occur.
Attorneys can help a spouse develop options and a plan that meets their needs. They can assist them in negotiations and protect their rights in legal proceedings.