How to deal with the family business, finances and disputes?

How to deal with the family business, finances and disputes?

Sound Management

A Family business is the pillar of Family assets. A special attention should be given to it in a Family Charter. Who manages the Family Business? Family members and/or others? They may be assisted by consultants and advisers. How are Family directors and officers appointed? Are they remunerated? If yes, what is their legal status? Are they employees of the Family? How to remunerate them? The Family Charter should provide answers to these questions. An intricate matter not to be ignored, when drafting a Family Charter, is to clarify and set out the management roles of Family members and of non-Family members. Who will manage the Family Business? A Family member? An outsider? What are the prerequites for a Family member to sit on the Board of the Family Business? Are young Family members admitted to play a part in the management of the Family Business? On what conditions? How are the Family Business managers and/or directors remunerated? How to evaluate their performance? How are shares in the Family business transferred? The easiest way to approach this matter is to assimilate the Family to a legal or a corporate entity, having its own existence and interests independently of its members’. The reason for this approach is to set a tested framework for the purpose of managing the Family and its assets in the most professional and businesslike manner. Ultimately, the Family members shall benefit from such an overall unbiased management. Consequently, and as a result of such simulation, a Family may have a number of bodies to manage it. The Family Charter shall provide for a structure which may comprise of the following bodies:

  • A Family Assembly: It comprises of all direct Family members. Its operation and decision-making process follow the pattern of a general meeting of a company.
  • A Family Board: This board is the executive management arm of the Family. It runs its affairs. Its members are appointed by the Family Assembly from amongst Family members or non-Family members. As a matter of fact, the independent executive Board members play a crucial role within the Board, as their input and contribution are made without any outside influence or pressure.
  • A Family Council: It is the body that comprises of Family members elected by the Family Assembly. In families, with a large number of members, it is more practical and more efficient to have a Family Council. In its capacity as the Family’s representative, this Council deals with Family matters on behalf of all Family members. The Family Charter shall set out the role and powers of the Family Council. Its most important role is to inter-act between the Family Assembly and the Family Board.
  • Family Committees: These are specialized committees comprised of the Family members who share common interests. Relevant matters of concern to the Family may be submitted to them for perusal and issuance of related recommendations.
  • Family Office: This appointed body runs the Family day-to-day affairs. It implements the Family Board decisions. Typically, it consists of administrators, legal counsels and fund managers. Family Office executives are recruited on the basis of their education, skills and experience. Their main task is to tend to the needs of the Family and its members in all respects. Family Office services range from concierge services to the provision of highly technical financial and legal advices and opinions, which cover current or contemplated investments of the Family.

Mismanagement

A Family business, just like any other business, is exposed to the mishandling of its affairs, and the mismanagement by those who have been entrusted with the same. Such mismanagement may materialize in a number of ways, and may be attributable to a number of factors: a Family officer acting intentionally, or negligently, or simply omitting to act when his/her action is required; or to the lack of skills required for the job. The easiest way to assess the performance of a Family business directors, officers and executives (hereinafter “a Manager” or “Managers” as the context dilates), is to assimilate such business to a corporate business. The duties, in particular the fiduciary duties, laid upon a Manager are no different than those laid upon their counterparts in corporate concerns. Governance, in its widest sense, is equally required in Family businesses. Family Office Managers are similarly bound by the duties of care and loyalty. Their fair dealings, on behalf of the Family, is not a virtue, but a genuine duty. They should exercise generally recognized best practices, in good faith, using sound business judgement at all times. The fact that a Family Office Manager is at the same time a Family member, elected, or designated, to assume a managerial function, does not exonerate him of such duties.

  • Liability and Accountability: We are inclined to consider a Family member, who is in charge of managing a Family business, more at fault when violating governing regulations, in-house or otherwise, such as laws and official directives, than if “strangers” to the Family perpetrate the same wrongful act. The blood and “next-of-kin” bond with those the wealth of whom have been put in a Manager’s hands, creates, somehow, a type of a personal charge that does not exist in concerns managed by people who do not have such relationship. As we know, a court of law, looking into a matter brought to its attention, may very well award damages to the Family resulting from the misperformance of a Manager. In the event of criminal wrongdoings, such member may, in addition to the payment of a monetary fine, be sentenced to confinement in jail.
  • Disputes with a Managing Family Member: Is a dispute that arises between a Family member, who holds an executive function in the Family Office, or in any other concern owned or controlled by the Family, and the managed entity considered a Family dispute? There are two possible ways to look at this intricate matter, which occurs quite frequently in Families, let alone in Family businesses. If we consider the dispute as a Family dispute, in some cases, other Family members may take sides and support the Manager whose performance is being questioned, against other Family members who challenge such performance. Some of these disputes end up creating cleavages among Family members, and may result in deadlocks that are detrimental to the Family business and could threaten its continuity. The more reasonable approach could be to consider the dispute as being simply a professional dispute; the route cause behind it should be assessed in an objective way, as if the Manager in question was a total stranger to the Family. A common wrongful act by Family Office executives, who are members of the Family, is what we refer to in corporate law as “self-dealing”. This type of dealing consists of the Manager causing the Family business to transact with a related party, thus creating a conflict between the interest of the Family and the personal interest of the Manager. A typical illustration of this conflict is when a Manager reaps financial, or reputational benefits, on the account of the Family business and, consequently, the Family members.

Family Finances

The Family Charter provides also for the management of Family funds, as well as for the rules governing their spending and distribution. The Family Board sets the strategies for the achievement of the Family financial objectives within guidelines normally set by the Family. It also provides for the regular financial reporting to g members (annual, quarterly, monthly). This reporting helps keep all Family members abreast of the performance of Family liquid and non-liquid assets and help them plan their own individual finances and investments.

Settlement of Family Disputes

Disputes among Family members are inevitable, especially when they share the ownership, and/or participate in the management, of a Family business. A well thought Charter addresses all possible controversial issues that may arise within the Family and is, in this respect, a mitigator of Family disputes, and a reducer of their frequency. It helps settle such disputes to a large extent. These disputes normally arise as a result of unclear situations. All members of a Family may not agree on the way profits realized by the Family are to be disposed of. A Family Charter usually addresses financial matters, such as the acquisition and preservation of valuable assets, the maximization of the return of such assets. If the management and disposal of these assets are regulated, the occurrence of disputes over them is automatically reduced. Having said that, neither a Family Charter nor any other type of documents may prevent or help avoid acute Family disputes. It is only the will and determination of at least one, or one clan, or one branch of the Family members who are in dispute, that are likely to minimize the adverse consequences of the non-settlement of the disputes, not only between or among them, but mainly on the Family as a whole. This may require concessions to be made. These concessions will prove to be precious gifts to the Family. The Charter sets out a whole procedure for the settlement of the Family disputes: how to initiate the process? Who, or which body, to submit the disputes to? Arbitration by an arbitration panel? Private arbitration? Or, in a worst case, litigation before a specific court?

SabaZreik e1674573147551

Saba Zreik

Manal Consultancy

-

Premarital and Postmarital Agreements – Enforceability

Premarital and Postmarital Agreements – Enforceability

Enforceability

An important issue for the couple is whether the agreement will be enforceable. Generally, it will be upheld if it was entered into voluntarily and is not unconscionable. There are several facts the courts will look at to determine enforceability.

First, both parties must sign the agreement voluntarily. It should not be signed in circumstances that may indicate duress, coercion or undue pressure. This means that the parties should not sign the agreement en route to the wedding ceremony. Ideally, the agreement should be signed well in advance of the wedding.

Second, there must be full and complete disclosure of all of the assets, income and debts of each party before the agreement is signed. Assets include all bank, brokerage and financial accounts, all retirement accounts, such as IRA’s or 401-k’s, all stock, business and partnership interests, life insurance, personal property and real estate. Copies of current income tax returns should be exchanged to verify income. Finally, a list of liabilities, mortgages and credit card debts should be prepared by each party. This exchange of information should be made before the agreement is negotiated and well before it is signed. The agreement should also waive the right to any further disclosure of information.

Third, each party should be represented by his or her own attorney who can explain how the rights and obligations arising from marriage are modified or preserved by the agreement. An agreement that has been reviewed and revised by an independent attorney is more likely be viewed by the courts as having been entered into voluntarily and as being fair to both parties.

Fourth, some states make a determination whether the agreement was fair to both spouses when signed. Other states will not address this fairness issue when full and complete disclosure was made before the agreement was signed.

Internationally, not all countries will enforce a premarital agreement. For example, prenuptial agreements have historically not been considered legally valid in England. However, there is a 2010 Supreme Court case which indicates that such agreements can “in the right case” have decisive weight in a divorce settlement. Thus, in England the law is quickly changing and while not strictly enforceable there, Englishcourts are becoming more open to considering them. Premarital agreements are not enforceable in the Bahamas. In Ireland, while not enforceable, the law gives Irish courts broad discretion in the distribution of property upon divorce and they can consider a premarital agreement.

Many jurisdictions specifically recognize both domestic and foreign premarital agreements (e.g., Japan). Some countries (e.g., Luxemburg and the Netherlands) are parties to the Hague Convention on the Law Applicable to Matrimonial Property Regimes which specifically authorizes premarital agreements. The Convention does not apply to (1) maintenance obligations between spouses; (2) succession rights of a surviving spouse; or (3) the capacity of the spouses. The Convention applies even if the nationality or the habitual residence of the spouse or the law to be applied by the Convention is not that of a contracting state. A marriage contract is valid as to form if it complies either with the internal law applicable to the matrimonial property regime, or with the internal law of the place where it was made. It must be in writing, dated and signed by both spouses.
In France, Belgium and Germany, the premarital agreement must be executed in front of a notary. In France, it cannot be amended during the marriage without the approval of the court. Most countries in continental Europe accept a properly drafted pre-nuptial agreement, including France, Belgium, the Netherlands, Germany, Switzerland, Sweden, Denmark, Norway, and Finland. While most jurisdictions will impose a default marital regime, it may be possible to change the default regime through an agreement.

In the United States, premartial agreements are recognized, although they may not always be enforced. Both parties should have lawyers represent them to ensure that the agreement is enforceable, there should be full disclosure of the couple’s assets, and it should be entered into far enough in advance of the marriage so as not to be considered entered into based on coercion.

Under the UPAA, a premarital agreement may not be enforced against a party if he or she provides (i) he/she did not execute the agreement voluntarily, or (ii) the agreement was unconscionable when it was executed and before execution of the agreement he or she (a) was not provided a fair and reasonable disclosure of the property or financial obligations of the other party; (b) did not voluntarily and expressly waive in writing any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and (c) did not have (or reasonably could not have had) an adequate knowledge of the property or financial obligations of the other party.

Under the UPMAA, an agreement is unenforceable in four events:
(1) the party’s consent to the agreement was involuntary or the result of duress;
(2) the party did not have access to independent legal representation;
(3) unless the party had independent legal representation at the time the agreement was signed, the agreement did not include a notice of waiver of rights or an explanation in plain language of the marital rights or obligations being modified or waived by the agreement; or
(4) before signing the agreement the party did not receive adequate financial disclosure.

Each of these elements is explained in further detail in the UPMAA.

There are divergent interpretations of voluntary. An agreement has been found to be entered into involuntarily or as the result of duress when a significantly revised version of premarital agreement was presented 3 days before the wedding. However, in some instances an agreement presented the day before wedding was held to be voluntary.

If a party does not obtain independent legal representation then there should be a Notice of Waiver of Rights with conspicuously displayed language stating the following:

If you sign this agreement you may be: Giving up your right to be supported by the person that you are marrying or to whom you are married. Giving up your right to ownership or control of money and property. Agreeing to pay bills and debts of the person that you are marrying or to whom you are married. Giving up your right to money and property if your marriage ends or the person to whom you are married dies. Giving up your right to have your legal fees paid.

With respect to access to independent counsel, the UPMAA stops short of requiring representation for an agreement to be enforceable.
For reasonable financial disclosure, it pertains only to assets of which the party knows or reasonably should know. Disclosure will qualify as reasonably accurate even if a value is approximate or difficult to determine and even if there are minor inaccuracies. Some commentators have urged that a waiver of the right of financial disclosure be valid only if the waiver were signed after receiving legal advice. However, the UPMAA does not require legal representation for a waiver.

Some jurisdictions put the burden of proof on the party seeking enforcement of an agreement. Many jurisdictions impose greater scrutiny or higher procedural safeguards for marital agreements as compared to premarital agreements.

Unenforceable terms include those which (1) adversely affects a child’s right to support; (2) limits or restricts a remedy available to a victim of domestic violence; (3) purport to modify the grounds for a court decree, separation or marital dissolution available under law; or (4) penalizes a party for initiating a legal proceeding leading to a court decree, separation or marital dissolution.

Finally, the term in the premarital agreement or martial agreement which defines the rights or duties of the parties regarding custodial responsibility is not binding on the court. Custodial responsibility means physical or legal custody, parenting time, access, visitation or other custodial right or duty with respect to a child. The basic point is that parents (and prospective parents) do not have the power to waive the rights of third parties (their current or future children) and do not have the power to remove the jurisdiction or the duty of the courts to protect the best interests of minor children. This also applies to stepchildren to whatever extent the state imposes child support obligations on stepparents. The list of types of provisions that are unenforceable is not exhaustive. It is common to include escalator clauses and sunset provisions in premarital agreements and martial agreements making a party’s property rights vary with the length of the marriage. One case rejected arguments that sunset provisions in a premarital agreement are unenforceable because they are contrary to public policy.

LeighAlexandra Basha 1 e1585388010511 scaled unsmushed

Leigh-Alexandra Basha

McDermott Will & Emery

What benefits does mediation offer in family disputes?

Mediation sessions can be held in a choice or combination of different settings:

  • The traditional set-up consists of individual meetings over several weeks.
  • In the case of one-day mediation sessions the participants begin in the morning and work in an open-ended fashion; the mediation finishes in the evening, whether or not a solution has been reached.
  • In shuttle mediation sessions the participants are in separate rooms, at least for some of the time, and the mediator moves between them.
  • The participants can always have their lawyers or advisors with them during the mediation sessions.
  • Hotel mediation sessions, which are mainly one-day sessions, take place in a peaceful hotel.

Can mediation solve family disputes?

Families are complex systems with several players. The way in which they function involves a combination of rational and emotional elements. It is only natural that people with their own individual talents, interests and perspectives do not always get along harmoniously. Spouses, children (clash of generations) and other members of the family system can all experience conflicts.

Isolated and limited measures often fail to achieve any sustainable and positive effects. Legal action and other forms of enforcement of unilateral interests can certainly lead to results, but also to hurt and long-harboured resentment. The latter situation is particularly undesirable if children are involved.

Mediation is not magic but a practical craft. It is based on an acceptance that conflict exists and that it can be addressed. However, the result is not a foregone conclusion. In some cases the conflicts can be completely resolved. In other cases this is not possible, but mediation at least results in the consensual resolution of the consequences of a conflict. In this way the original conflict is contained and prevented from further escalating. This in itself can be a considerable advantage if one thinks of the financial and psychological consequences of litigation that could stretch over many years. In mediation the parties have the opportunity of settling their issue by mutual agreement. The alternative to this is often a legal judgment, which can sometimes be difficult to predict in advance.

The mediation process is led by a neutral mediator (or by two co-mediators), whose core role is to help the parties work out a solution. The process can vary, but the common principle is that the participants clearly define where they are coming from and identify the interests underlying their personal perspective. What a person explicitly says and what their actual concerns are can sometimes be two quite different things. It is only once this groundwork has been carried out that fruitful and creative solutions can be found. These must be recorded in writing at the end of the process.

Mediation sessions can be held in a choice or combination of different settings:

  • The traditional set-up consists of individual meetings over several weeks.
  • In the case of one-day mediation sessions the participants begin in the morning and work in an open-ended fashion; the mediation finishes in the evening, whether or not a solution has been reached.
  • In shuttle mediation sessions the participants are in separate rooms, at least for some of the time, and the mediator moves between them.
  • The participants can always have their lawyers or advisors with them during the mediation sessions.
  • Hotel mediation sessions, which are mainly one-day sessions, take place in a peaceful hotel.

Mediation is thus an option for working on family disputes in an effective and solution-oriented manner.

Challenges and problems for Middle Eastern Family business posed by inheritance laws and family divisions

Challenges and problems for Middle Eastern Family business posed by inheritance laws and family divisions

Middle Eastern families in business are challenged by generational change, due to the combined effects of inheritance laws, companies laws, large families and rivalry amongst heirs, challenges which are usually recognized when it is too late.

Internal threats to ‘Middle Eastern’ families in business

  1. Many Middle Eastern family businesses have been remarkably successful and have become true financial and business powerhouses. Paradoxically, even the most successful families often have dangerous fault lines within, and they fail to recognise potential lethal threats from the inside before it is too late.
Fault Lines Within
  1. Dangers from within the family are subtle and these problems are often more difficult for the founder or other family members to perceive or acknowledge, let alone tackle in an effective manner. But even hairline cracks in the family can widen and invite disaster, particularly where the cracks are disagreements between siblings, the family’s bridge to the next generation.
  2. In 1967 fine corrosion cracking triggered a catastrophic collapse of the Silver Suspension Bridge across the Ohio River in West Virginia, under the twin stresses of low temperatures and high bridge loading. A total of 46 people in motor vehicles died when they fell into the river with the bridge. Likewise, in families, the twin stresses of leadership transition and business pressures can open up differences between siblings or cousins and can lead to the disintegration of the fabric of the family and the business.
The Middle Eastern Cultural Context
  1. Most Middle Eastern family businesses were started by one or two founders who retain ownership of the equity. In the wings awaits a fresh generation of owners, and the number of heirs in the wings is often large, because the culture in the Gulf region favours large families. It is one thing to build a successful business, it is quite another task to imbue every stakeholder with a culture promoting the cohesion and continuity of the family in nurturing and growing successful business enterprises over generations.
  2. Regardless of whether or not a particular sibling understands the family business or embraces the culture, the Middle Eastern inheritance laws guarantee that this sibling will receive an inheritance share commensurate with each other sibling of the same gender, and the Middle Eastern companies laws in the Gulf region guarantee that any heir inheriting shares will have one vote for one share inherited. This combined force of inheritance laws and companies laws means that for most families in business there is absolutely no guarantee that equity and the voting power will be vested in those heirs with the knowledge, ability, character and commitment to lead the family enterprise. Those heirs who do have the training and experience are commonly outnumbered and outvoted by other heirs without these qualities.
  3. The control of family business assets is a key which may unlock a vast reservoir of financial power, social prestige and an enviable lifestyle, so it is natural that there should be rivalry amongst heirs to lead the business. Add the element of sibling rivalry as an overlay and it can be seen that there is real potential for family business disagreements to escalate, particularly at the time when the founder ceases to play an active role.
  4. For these reasons, the inevitable transition associated with generational change and the inheritance process carries with it the potential to develop into an existential threat to the continuity of many Middle Eastern business enterprises. Even where the family business does not break apart, the paralysis of decision-making and the need for complete unanimity in the post-founder era may cause a gradual erosion of the business and asset base.
What Can Middle Eastern Families in Business Do?
  1. The first and the most important thing is to realise that in many cases the past history of the family and its enterprises may not be a reliable guide to what will happen in the future, so something must be done to secure the future.
  2. A family which has a desire to sustain and grow a business together must:

(a) develop a vision;

(b) generate a consensus to embrace the vision;

(c) formulate a plan to take the practical steps to ensure the vision continues (including a succession or stewardship plan); and

(d) implement that plan in an effective way with the best advice.

What Can Families’ Legal Advisers Do?

  1. There are clearly limitations as to what legal advisers can achieve in managing close familial relationships. However, good legal advisers can help, particularly where the atmosphere in the family remains positive. For example they can:

(a) suggest that the family needs to work together to develop the right succession plan and framework of arrangements to promote stewardship, continuity and an orderly transition when generational change occurs;

(b) make sure the right questions are asked and addressed even though the questions may be tough (e.g. should present or future in-laws have a role in the business?);

(c) encourage the creation of safety valves, because if a minority of family members becomes locked into a structure which others control they may feel they have no choice but to fight to break up the business, unless the minority is provided with a fair exit option.

Conclusion

    1. Family businesses are vital to the lifeblood of Middle Eastern economies and societies but there is a great need to educate families on the need to put in place the structures and governance platforms necessary for future continuity, harmony and growth in the business enterprise. The hidden economic and social costs of families in business which are dysfunctional are very high, measured in lost business revenues and missed growth opportunities. The family must put in place a leader or a leadership group which can act decisively to move the business forward. Well structured arrangements are needed to head off the ultimately destructive process of open conflict and litigation within families.
    2. The challenge for families is to apply the right guiding principles for good corporate governance to build a cohesive family and business dynamic for the good of future generations. Otherwise, the bridge to the next generation will crack and fail, and the family legacy will be lost.

Note: An extended version of this article was first published in “The Oath”, the Middle East Law Journal for Corporates in May 2014. 

A viable parenting plan under Polish law

A viable parenting plan under Polish law

The parenting plan ought to be precise and detailed, defining the respective responsibilities of the parents in all realms of the child’s life. At the same time, however, the parenting plan ought to be flexible enough to accommodate real-life practicalities.

How to prepare a viable parenting plan?

The parenting plan is a set of voluntarily agreed rules regulating exercise of parental rights and interacting with the child after the parents’ divorce. In order for the parenting plan to be included in a divorce decision handed down by a Polish court of law, the following prerequisites must be met: unanimous application by the parties to the divorce proceedings, submission of the parents’ agreement, and substantiation that it is reasonable to expect that the parents will co-operate in matters concerning the child.

Under the Polish Family and Guardianship Code, a court shall accept and affirm the parenting plan if it is compatible with the welfare of the child. The degree to which the parenting plan is accepted, and the exact means of its implementation, are left to the court’s discretion. The original parenting plan may be subject to modification in the course of the divorce proceedings, in line with the court’s own adjustments, and/or by the parents acting on the court’s recommendations. Where the original parenting plan is deemed to be too succinct, the court may accept a plan in which the same basic provisions are extrapolated upon to a greater level of detail. Accordingly, the question arises, how to formulate a parenting plan which stands a good chance of approval as first formulated by the parties to the divorce proceedings?

The Polish Family and Guardianship Code does not lay down detailed requirements as to the form or contents of the parenting plan, leaving plenty of leeway for different solutions best suited to the specific circumstances of the given divorce. Albeit the legal doctrine states that a parenting plan may be formulated orally for the court records or worked out before the court as it sits in session, the written form is recommended. In general, a parenting plan should be specific, yet flexible, setting out how, and when, the various parental duties are to be performed to the child’s benefit, with due heed for the child’s age and personal circumstances.

A parenting plan may begin with a broad formulation of the parental rights and specifics as to how the child is to maintain contacts with both parents and as to how the child support costs are to be divided between the parents. Having defined this framework, it may move on to details, such as:

  • Contacts with the child – when the child is to spend time with each parent, where it will reside. Some attention may also be devoted to the question of the child’s contacts with other individuals, e.g. with new partners of the respective former spouses;
  • Vacations, holidays – issues such as with whom, and for how long, the child will stay during school vacations and/or public holidays, rules governing foreign travel with the child, who is to hold the child’s passport and other documents;
  • Health care for the child – who is to make decisions concerning, say, selection of physicians and modes of treatment, who is to attend to the child’s regular health regimen (check-ups, vaccinations), and who is to have access to the child’s medical records;
  • Education – who, and how, is to make decisions concerning the child’ educational path and future career choices, selection of schools, responsibility for maintaining contacts with the child’s teachers, permission for field trips / extracurricular activities, who is to cover the costs associated with the child’s education;
  • Finances – alimony as well as responsibility for all and sundry costs associated with caring for the child.

To the extent possible, any and all such matters ought to be consulted with the child herself – the Polish Family and Guardianship Code actually institutes such a duty for parents working on a parenting plan. It is also worth mentioning that the Polish Family and Guardianship Code establishes a rule that siblings should be brought up together, unless the welfare of the child requires a different outcome.

A parenting plan may also institute a procedure for subsequent amendment of its provisions and for resolution of any attendant disputes, i.e. appointment of an impartial mediator.

After they have agreed upon the proposed parenting plan, the parents present it to the court for assessment from the perspective of compliance with applicable laws and of the specific situation of the child. The court may duly adjust the proposed plan.

If the parents have reached agreement with regard to specific issues only, they may bring such an incomplete plan before the court. Should the court deem this to be insufficient, it may set an additional deadline for formulations of a fuller parenting plan or refer the matter to mediation.

Why prepare a parenting plan?

If the parents themselves do not reach agreement as to how they are to divide care and responsibility for their child, a divorce court sitting in accordance with Polish law may proceed to adjudicate on custody, financial support etc of its own accord, with the possible outcome that one parent will be awarded well-nigh complete custody, and the other – a limited set of basic rights, plus the duty to provide for the child financially. If the parents have not reached agreement on their own, or if they have proposed an agreement which is invalid or unenforceable, a Polish court may not leave the parental authority with both parents.

Accordingly, it is advisable that the parenting plan is precise and detailed, defining the respective responsibilities of the parents in all realms of the child’s life. At the same time, however, the parenting plan ought to be flexible enough to accommodate real-life practicalities.

While working out a parenting plan may seem like the last thing that divorcing parties want to do, its preparation, due to the circumstances mentioned above, is strongly recommended. In the end, they say that even the worst settlement is preferable to the best judgment.