Divorce Takes the Economy Into Account
By VINCENT M. MALLOZZI
Published: October 31, 2008
HIGH-FINANCE marriages are crumbling along with the economy, divorce lawyers say, and because of it, couples who are splitting up are paying closer attention to the timing of bonus payouts and other economic trends in the hope of achieving the best possible settlement.
A lot of couples who have been living the good life have begun the process of re-evaluating their lives together, said Jacalyn F. Barnett, a Manhattan divorce lawyer. In the past year, I have seen how the dramatic changes in our economy have had a dramatic effect on married people, especially those who have been used to earning high salaries, and many of those couples can no longer handle the stress.
Ms. Barnett noted that between Labor Day and New Years Day, there is always a flood of new divorces. In other words, if spring and summer are the seasons for marrying, fall and winter tend to be the high seasons for divorce. These are the prime periods of evaluation, Ms. Barnett said.
Tom W. Smith, the director of the General Social Survey at the National Opinion Research Center in Chicago, echoed Ms. Barnetts findings. A radical shift, in the value of assets like stock portfolios or real estate, he said, can wreak havoc with divorce negotiations, which can last months or longer. All this just changes the playing field.
Debbie Nigro, a moderator of support groups brought together by First Wives World, a Web site that offers counseling and information resources to women who have gone through or are about to enter divorce proceedings, said she has been hearing tales of financial woe from both women and men whose relationships, among other investments, have hit the skids.
When you are perceived by your partner in a certain financial way, and now you can no longer continue to be that person, it flips a switch, she said, and the relationship sours.
Ms. Nigro said she had been in touch with a Wall Street executive who was divorced within the last year, ending a 17-year marriage that once seemed as solid as his investment portfolio. In the divorce settlement, the large bonuses he used to receive have come back to haunt him.
The lawyers made an arrangement based on the net earnings of this executives career, including the average of his bonuses the past six or seven years, and added that to the alimony and child-support payments, Ms. Nigro said.
Those bonuses vary, and in these troubled times, they are not what they used to be, she said. But he is still making payments based on a time when his bonuses were much larger. As a result, this poor guy is barely surviving financially.
He is not the only one who has been victimized by this formula, Ms. Barnett noted. Timing is everything. The date of valuation of assets can make all the difference in the world depending upon when an action was started.
She added that when the possibility of divorce looms, both spouses have to consider what assets are available and which side of the equation they fall on.
If youre a person who creates the income, and your income stream is plummeting, it might be in your best interest to get divorced after Jan. 1 so that you have it documented and it works in your favor in a settlement or litigation, she said. Or if youre the person who is financially dependent, you may be concerned about waiting too long because the money might disappear and the lifestyle you have become accustomed to may be reduced.
Mitchell Devack, a lawyer in East Meadow, N.Y., who handles divorce cases, offered a slightly different view. From a nonearners perspective who is looking for the best possible settlement, its probably best to wait on the sidelines right now and hope this economy gets going again, he said.
In more stable economic times, there is no reason to believe that a spouses salary or bonus or 401(k) or pension will change, so there is less strategy involved in terms of timing a divorce with the help of a lawyer and an accountant, Mr. Devack said. These are the kinds of issues that only come to the forefront during hard times.
Mr. Devack said he has seen a noticeable spike in the high-earning divorce cases in the last year.
Ms. Barnett surmised that those spikes tend to occur late in the year, because Family vacations have already been taken and bonuses have already been doled out, and now people in shaky marriages begin to ask themselves, Do I want to keep sailing on this lifeboat? Or is it time to bail out?