Published on July 17th, 2006 by Alan L Sklover
“You almost never hear of anyone dying past that age.”
– George Burns (1896-1996, at 100)
ACTUAL CASE HISTORY: Maurice, 64, had been the Director of Mergers and Acquisitions for a large pharmaceutical firm for 17 years. During that time he had overseen the purchase of nine smaller drug firms, and their incorporation into his company’s operational, financial and management structure. After mergers take place, downsizings are a common occurrence. In this last merger, it was Maurice’s “turn” to be downsized, but he really didn’t mind one bit. He was ready to retire, his wife couldn’t wait to travel, and he had been presented with a very substantial severance package, in fact the equivalent to almost five years of his overall compensation. All together, the package was worth over $1 million. He came to us to have his severance agreement reviewed, just to make sure there were no hidden “traps.”After Maurice reviewed his severance agreement with me and one of my former partners we explained to him that his severance agreement had no real problems, and no hidden traps, but suggested that two or three relatively minor items were capable of being misunderstood, and thus could use some clarification. At the end of the meeting, Maurice said to us, “So, what should I do now?” My former partner said, “You should address these three items with Human Resources.”
I paused, and then said, “I respect my partner’s point of view, but I respectfully disagree. . . Maurice, you should make a copy of your agreement, right now, and sign that copy, right now, in front of us.” Both Maurice and my partner looked puzzled. Maurice said, “But I don’t understand . . . aren’t there these three items that need to be clarified?”
I said, “Maurice, at my age and at your age, most of us are very aware of our mortality. If, on your way home today, you are hit by a taxi cab, and go into a coma, and haven’t yet signed that agreement, I can’t get that million dollars for your wife. Likewise, if you don’t wake up tomorrow morning, and before you went to bed you didn’t sign that severance agreement, I can’t get that million dollars for your wife. But, if you sign a copy right now, and anything happens to you, I can probably get that million dollars for your wife. Now, I don’t think you should give that signed copy to your company’s HR representative, but I think you should leave a copy here, and give a copy to your wife for safekeeping, as a kind of “insurance copy,” to make sure that – whatever might happen – your wife will get that million bucks, and your company won’t get to keep it from her. Sure, you can ask for those three clarifications, but I’ll sleep better knowing that, whatever happens, your money and your family are both protected.
Maurice looked at me, and said softly, “I never would have thought of that in a million years. That alone was worth the price of this consultation.”
LESSON TO LEARN: It’s simple . . . once you die or become incapacitated, you can’t accept an agreement. If you sign an “insurance copy” of an important agreement, such as a severance agreement, or certain insurance agreements, perhaps even an agreement to sell your home or a slightly imperfect draft of a will – even if you don’t deliver it to the other side – your spouse or family will later have a good chance of obtaining the benefits of that agreement. While there may be limitations on the later effectiveness of this prudent act, one thing is for sure: If you don’t sign an agreement before you pass on, or before you become mentally incapacitated, your spouse and your family may be just plain out of luck, with no chance whatsoever of gaining the benefits of the agreement. It could make a very, very big difference in the financial well-being of your loved ones . . . why not take such a simple, yet significant, precaution? You surely don’t want your loved ones ever to have to to say, “If only . . .”.
WHAT YOU CAN DO: Whenever you are faced with a valuable, basically correct legal document or agreement, one that needs mere “tweeking” but even in its imperfect state would give you or your estate great benefit, give serious consideration to signing and holding on to an “insurance copy” of it, just in case you should unexpectedly pass on, or become incapacitated, and thus lose any chance that your family will reaping the benefit they deserve. We recommend this frequently to our clients who have before them such severance agreements. We recommend you keep this in mind, as well.
SkloverWorkingWisdom™ emphasizes smart negotiating – and navigating – for yourself at work. Avoiding unnecessary risks to your job, your finances and your reputation, is essential. But it takes more than luck to make that happen. It takes forethought, care and prudence, the essential ingredients in good negotiating.
Always be proactive. Always be creative. Always be persistent. And always do what you can to achieve for yourself, your family, and your career. Take all available steps to increase and secure employment “reward” and eliminate or reduce employment “risk.” That’s what SkloverWorkingWisdom™ is all about.
A note about our Actual Case Histories: In order to preserve client confidences, and protect client identities, we alter certain facts, including the name, age, gender, position, date, geographical location, and industry of our clients. The essential facts, the point illustrated and the lesson to be learned, remain actual.