News of Bill and Melinda Gates’ divorce shocked the world. After 27 years of marriage and running an impressive foundation together, the couple has called it quits.
However, I’m rarely surprised by news of a split. I’ve seen even the happiest families torn apart over any number of disagreements.
That’s why, as a certified financial planner specializing in family enterprise, I always tell families to be prepared for conflict.
Conflict in the family is inevitable. It doesn’t always lead to divorce or splits among siblings, but even minor disagreements can lead to financial repercussions.
Strong family governance can help mitigate conflicts. What does this mean? Family governance is a management and organizational plan for the family. Just like you might have corporate governance for a business, you also need one for your family.
One of the key aspects of family governance is communication. If you don’t organize meetings to discuss conflict as it comes up, it will fester. Gossip will run rampant and it will be impossible to discuss things calmly. However, if there is a regular space and process for discussing problems, you can keep conflicts in check.
There are three separate areas that require communication:
Create separate meetings for these groups of people and make space to talk about relevant concerns. Be sure to set an agenda for each meeting and ask for input from all of the attendees.
Some common topics for family meetings include:
Also, remember to bring in a mediator when necessary. A trained family mediator with expertise in family business can help resolve conflicts and create plans to navigate even the most difficult situations.
Looking for a mediator? Elaine King is a mediator of the Florida Supreme Court and a certified Family Business Consultant by the Family Firm Institute.
You may think that you’ll never be the one to get a divorce or that your children will always want to be involved with the family business. However, we can’t see into the future! For this reason, I always advise clients to create clear exit strategies.
For example, what if one of your children wants to sell out their portion of the family business? There are a number of questions to consider:
Other concerns to consider include the death of an owner. Does the spouse inherit the asset? Or should it be passed on to one of the children? Or, in the case of divorce, will the assets be split 50-50? How will the children be affected by this outcome?
By answering these questions ahead of time, you can avoid a lot of conflicts. Instead of haggling over the details, you can simply move forward because all of the details have already been decided ahead of time.
Remember, even the strongest, most tight-knit families run into conflicts now and then. Be prepared for them so that you can work through them successfully.
Do you want to learn more? Follow Elaine King on Facebook, Youtube, Instagram, and Twitter for more strategies for intergenerational family businesses.
