Divorce!

Bill and Melinda Gates announced on Monday they are parting ways after 27 years. It is always sad to see couples splitting up after many years of marriage, and I wish both of them and their three children all the best as they move into this new chapter of their lives.

On a positive note, the couple does appear to be parting with a financial arrangement already in place and have said they will continue their philanthropic work together at the Bill and Melinda Gates Foundation. That is good news for many charities, given that the foundation’s support has driven global initiatives in healthcare, education, the empowerment of women and girls and other important causes.

Although the Gates’ did not have a prenup, they do seem to have worked out a separation agreement – a testament to the value of good attorneys. Given that Bill is the fourth richest man in the world, he no doubt had access to all of the legal help money can buy.

The vast majority of couples who divorce won’t ever have the level of wealth that Bill and Melinda Gates have. With a net worth estimated at more than $130 billion, they have more money than anyone could possibly spend, regardless of how his marital assets are divided.

However, for most high-net-worth entrepreneurs, a divorce can and usually does have a significant impact on the financial positions of everyone involved. The valuation of marital assets is often one of the trickiest issues.

That’s particularly true for entrepreneurs with closely held businesses – an important part of Marcum’s client base. Their businesses are often their most valuable asset. If a marriage does come to an end, valuing the business can become a time-consuming and sometimes contentious issue.

We’re seeing this right now with businesses that lost value during COVID because they were shuttered. While the entrepreneur who runs the business might prefer a valuation that reflects current business conditions, their spouse’s attorneys may push for a valuation based on pre-pandemic performance, arguing that once business conditions return to “normal,” so will the business’s value. With state courts across the country wrestling with this issue and little clear legal guidance available, it is essential for business owners who are divorcing to work with their advisor to make sure their financial records are in shipshape condition so they can come to an agreement that is fair to both parties.

There are many other financial issues that can complicate a divorce – concealed income and assets, the tracing of separate property, foreign holdings, you name it. Our marital dissolution practice team has helped clients navigate challenges like this for many years, as well as helped them to do post-divorce financial planning.

No one looks forward to unwinding a marriage but by working with trusted advisors to take care of the financial details in an organized and systematic way, it is easier for both parties to create space in their lives to heal and move on – and make sure there are adequate resources set aside to protect any children involved.

Relationships don’t always work out as planned – and as Bill and Melinda Gates found, no amount of wealth can protect you from that. But careful management of the financial aspects of divorce can cushion the blow and make it easier to embrace the future.

On another note, Sunday is Mother’s Day. My mother, who is 88 years old, will be in South Florida so it will have to be a Zoom visit with her this year while my children and I take Tracy out for our traditional Mother’s Day feast on Long Island. To all of you mothers out there, I hope you have a very special day surrounded by those you love.

Stay safe, stay healthy, and remember, we’re all in this together!