true. This will affect not only people contemplating getting married but also couples who have already been married for a number of years. Those who don’t want to stick to the rules of the game can be bought out. When it comes to a prenup in a family business, assets like a shared property or a shared business would be split. But there are some families that are adamant that the shares of any business assets and any financial assets stemming from the business can only be held by family that is through the blood line or adopted. “So if I was married to someone who was involved in a family enterprise then I wouldn’t necessarily be ever able to own the shares directly,” she says. “My children could own the shares; I could perhaps work in the business if that’s in the rules, but I cannot be allowed to own shares. So if I separate or divorce then somebody has to make up for the fact that I’m losing the part of the value that has become a family value in my nuclear family.” Some families agree that a newly married member of the family can become a shareholder. In this case, if the couple gets a divorce, there has to be a way of buying out those shares. Advisors often recommend life insurance for a spouse in case the shareholder dies to ensure the family is not disadvantaged financially but gets something that’s fair. Depending on the family rules, the shares may be put into a trust for the children with any income from that trust shared with the immediate
family for the benefit of young children. All of this gets even more complicated as second and third generations come into play and some want to be in the business and some may have other ideas for their futures. “At each step as a family enterprise expands, it’s important to step back and look at the original premise behind the agreements and ask if we are still going to be able to agree or do they need revision. And if they need revision, who is going to be at the table to revise them?” Ask the right questions St. Amand says asking the right questions and getting members of the family to think about all the alternatives and the right path for their family is the critical piece about advising family enterprises. She believes that families that go through this process often stay together longer because they’re happy to have the opportunity to be able to discuss issues in an open environment. St. Amand doesn’t do any investing for the family, but does help put together family programs with financial planning instilled in them. “So each nuclear family gets its own unique financial planning strategy within the overall picture.”
APRIL 2020
INSURANCE JOURNAL 13