You Must Plan for Your Clients’ Extramarital Affairs

Relationships that occur outside of the marriage happen enough that advisors should be aware of the situations arising from them even though not every client will need that particular advice. The extramarital relationship can have particular repercussions if the married person is affluent. The relationship can be short flings or long-term affairs, and the longer the affair the more likely the “stranger to the marriage” may feel entitled to certain assets or a certain percentage of the person’s estate.

The conversation to convince the client to be honest about the affair may be awkward, but it could be pivotal to be forward thinking and cover all aspects of the client’s testamentary desires. Clarity about the financial aspects of the relationship supported by legal documentation and legal structures can be very beneficial. An irrevocable trust with the paramour designated as the beneficiary can be effective to make sure they are provided for after the client’s death while also guaranteeing that a jilted spouse or disenchanted descendants cannot alter it.

What about a rejected lover? “Hell hath no wrath like a woman scorned.” The entanglement of embarrassment and revenge may add a certain spice to Hollywood movies but it does not do any favors for clients. Astute wealth planning and carefully worded nondisclosure agreements with substantial legal penalties can be effective in these unfortunate situations.

See Russ Alan Prince, Russ Prince: Yes, Advisors, You Must Plan for Your Clients’ Extramarital Affairs, Financial Advisor Magazine, January 10, 2019.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.