Maintaining Relationships With Separating Couples as an Accountant or Financial Planner

Despite the best of intentions, what often happens in these circumstances is that one of the parties in the separation has been more directly involved in giving instructions to you. This could be either the husband or the wife. When this happens, you need to consider if you should maintain a client relationship with both parties, and if so, how and what potential issues may arise in doing this. 

As a trusted advisor, you may need to work together with your client’s lawyer to achieve the best outcome for both sides.  However, where couples have separated, they are each likely to need independent advice about aspects of the structuring of their settlement, which is where conflicts can then arise.  

In my experience as a family lawyer, there are three main areas you need to consider if you are an accountant or financial planner that is contemplating continuing to work with both a husband and a wife who are separating. 

1. Determine if there is a conflict of interest

The first thing to consider if you are an advisor who is faced with this situation is to establish if a conflict of interest is likely to arise. Ask yourself whether you can continue to assist both the husband and the wife in the context of a separation, and whether their interests may misalign when providing advice in future.  

If you do decide you are going to stay involved with both the husband and wife, then you need to ensure that you’re communicating with both of them.  For example, when you email them, make sure you’re copying them both in to those communications, along with their lawyers. This helps to ensure you avoid any perception that you’re favouring one person over the other, in terms of the independence of the advice.   

When a client comes to me as a family lawyer, it is sometimes raised that one person from the relationship feels a little bit uneasy with the situation of continuing to share an accountant if they have had limited or no contact with them.  

When that arises, often we will assist them to explore obtaining advice independent of their spouse. 

Some questions we ask include:

• Have you had any communication with them and if so how frequently?
• Do you have an ongoing working relationship with them? 
• Are you comfortable with how it’s currently working? 
• Do you want to consider getting some independent advice?

It is not uncommon where we may see a situation, particularly at the end of long marriages of retirees, where parties have adopted traditional roles,  where a wife has had no communication with an accountant at all. They haven’t met them or they might have only met them fleetingly to sign documents. In this circumstance, they may feel more comfortable getting their own advisor. Whereas others, who’ve been far more actively involved may indicate they are comfortable for the existing accountant to continue to assist both parties.

A recent example of this I witnessed was where a separating couple was receiving advice from both a financial planner and an accountant. Both the husband and wife had both been involved in the setup as well as receiving advice during the marriage. Upon separation, they decided that they would continue to have the same advisors assisting each of them, irrespective of the fact that there is a potential for conflict. That only worked in this circumstance because they both had strong working relationships with the advisors,  so both parties felt that they had a relationship of trust and confidence in those advisors. What was most important in this instance, was that along the way, there was communication that both the husband and wife have received. This avoided the perception that one party was being favoured over the other. 

In my time as a family lawyer, I would say this example, however, is quite rare. It’s not often that both people have been equally as involved in the accountant or advisor relationship. It’s much more common, as an example, for a wife who after a long marriage hasn’t had any involvement whatsoever with the advisor. In those circumstances, the wife will often feel that there is not a particular connection or need to continue that relationship. 

So in circumstances like these, it’s an obvious choice that the husband will continue to use the existing accountant and the wife seek advisors they are more comfortable with – someone new and independent that we can refer them to.

So as a measure to avoid any conflict of interest you will want to ask yourself if you are advising one party about the advantages of doing a settlement a particular way in terms of tax or structuring.  For the avoidance of any doubt, you may consider raising whether they are comfortable to continue working with you from the outset. Or at a minimum, flag that there is a potential for this to arise and have an open discussion about it.

2. Work collaboratively

Regardless of whether you think a conflict arises, you may wish to advise both of your clients to get some independent family law advice early on. You are often one of the first people to find out about a separation, so are in a position to help facilitate discussions between the two parties in the early stages about the potential impacts on the business or how that might work and encourage them to get early legal advice to keep things amicable and avoid issues arising later which may jeopardise their ability to achieve this. 

As much as you can be helpful from the accounting side of things, ensuring your clients have an understanding of where they each sit in a family law setting can be beneficial for them both. If a lot of discussion is had before a family lawyer becomes involved, they might reach agreements that then don’t have ‘stickability’ – they may potentially propose a solution that they may feel is achievable but is not achievable  or has some risks or downsides for them when formalising a property settlement. 

Related: Accountants, Financial Planners & Family Lawyers: Working together for the optimal client outcome

Accountants: Gifts and Inheritances – How are they treated in a Property Settlement?

We’ve covered this off in a prior article about What accountants need to know about managing a relationship breakdown. When it comes to family law, it  is wise to adopt a collaborative approach, working with your clients and their family lawyers. This way you are best placed to ensure the most tax and cost-effective methods are adopted as part of the financial settlement. With the parties working together, their separation can be formalised to ensure a ‘clean break’ and no further claims can be made. 

Working with each person’s family lawyer to achieve the best outcome is always the most effective approach.

3. Understand the role you play

When working collaboratively with your clients along with their family lawyers, it helps to keep to the role you play in the process. Naturally your role is to assist your client and add context to the situation from a tax and accounting point of view and generate potential options for structuring a settlement, once they have obtained advice.  What is key is to be mindful of not inadvertently setting expectations that may not be able to be achieved from a legal point of view.

To be helpful to your clients in trying to avoid a dispute and keep things amicable, as an accountant you can sometimes find yourself treading the fine line of starting to assist in negotiations and discussions about how a property settlement might occur.  Without the husband and wife having had independent legal advice about what their entitlements are, sometimes despite the best of intentions, you find yourself acting outside of your core role in the process. This potentially creates some issues for one or both parties down the line when they inevitably get independent legal advice about the workability of what has been discussed.

So in an effort to be helpful to your clients what can sometimes be the best course of action in these circumstances is to point them in the direction of some early advice. That’s not to say that things won’t be able to be worked out amicably.

 As a family lawyer, I am a problem solver first and foremost.  We are trained to find solutions, problem solve and work together with our client’s advisors to collaboratively achieve an amicable and early outcome.

By getting legal advice early, your clients may avoid problems arising down the track. This of course is best achieved by referring your clients to lawyers that adopt the same kind of holistic approach to problem-solving and finding a collaborative outcome to keep things amicable and ideally avoid the need to go to Court. 

For separating couples who own a business and both have been actively involved, an example of that I’ve seen in my time as a family lawyer was where a husband and wife had some discussions via their accountant about potentially both of them remaining working in the business and not untangling their financial affairs. But the wife didn’t necessarily appreciate the risks that were associated with that for her.  She wasn’t comfortable continuing to be tied up with the success or otherwise of the business and the financial decisions that were being made by the husband. So while there seemed to be some attractive aspects of both of them remaining in the business, it also exposed the wife to some risks and potential issues to arise, that ultimately when she sought advice, wasn’t comfortable to take on.

Essentially, maintaining relationships with separating couples as an accountant or financial planner means you need to focus on being helpful, but ensuring you don’t find yourself in a situation where the independence of your advice from either the husband or wife is called into question. It can be a difficult situation to manage when you’ve had a longstanding relationship with both parties. So getting family lawyers involved early in the process will help ensure the role you play in the separation is not compromised. 

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