dealing with mistresses and mister-esses.
by anthony glomski and russ alan prince
the terms “mistresses” and “mister-esses” tend to have negative connotations, as they refer to out-of-marriage emotional or sexual relationships. all too often, wealthy individuals with a paramour (illicit partner) open themselves up to potentially very messy and costly situations.
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family relationships are commonly impacted. for example, the matter of what assets become the property of the paramour can be especially problematic without the implementation of certain wealth planning strategies.
out-of-marriage relationships range in value from insignificant flings to lifelong relationships. the longer the relationship, the more likely the paramour will have or believe in having “rights” to certain assets or a certain percentage of the affluent individual’s net worth.
clarity about the financial aspects of the relationship supported by legal documentation and legal structures can be very beneficial. the aim is to cover all considerations from promises made and gifts given to prospective inheritances. however, this is the exception, not the norm.
accountants can play a significant and valuable role in helping their wealthy clients deal constructively with the situations. by astutely providing wealth planning, there are likely to be far fewer legal challenges. for example, putting assets in irrevocable trusts with carefully constructed contingencies where the paramour is the beneficiary can be very effective in ensuring the person is taken care of and making certain disenchanted family members cannot upset the arrangement.
consider the all too common situation in which the relationship between the wealthy individual and the paramour gets “old.” many times, the current paramour gets replaced by a new one, setting the stage for serious confrontations. jilting a lover can easily lead to that person seeking some form of revenge. one of the easiest ways to enact revenge and extract concessions is to threaten to expose the affluent individual’s secrets.
defusing these situations takes a very delicate touch where all the parties avoid damage to each other or themselves. for example, accountants proficient at wealth planning combined with carefully worded nondisclosure agreements can be very effective in ensuring these situations do not blow up into significant problems.
there are also often problems when long-term out-of-marriage relationships become known after the death of the wealthy individual. this discovery can dramatically and traumatically impact family members. for example, when only the children become aware of a paramour after their parent’s death, any prior wealth planning using trusts or other entities can avoid costly and often fruitless legal battles.
accountants proficient at wealth planning are well-positioned to help their clients deal with the implications of out-of-marriage relationships. accountants need to be proactive in these situations. this means building trust with clients so that they share their secrets and helping them address the thorny issues in their lives.