Divorce Analysis Blog

Advanced Ideas About Divorce and Money

Divorce and Privacy in the Age of Facebook

One of the most remarkable changes to the divorce arena over the past few years is how social media tools such as Facebook and our paparazzi-obsessed society have been able to open doors into people’s private lives because of their divorce.

Notable examples include:

Jack Welch, CEO of General Electric: Based upon filings in his divorce case, he was challenged by GE shareholder activists for receiving unreasonably high compensation

Frank and Jamie McCourt, Owners of the LA Dodgers: Information found in divorce flings have jeopardized their ownership of the team

Barak Obama: He would likely not have won the Presidency had information about his opponents activity at swingers clubs not been publicized via a divorce filing in the Illinois Congressional contest.

From Wikipedia: Jack Ryan is a Republican from the state of Illinois who was forced to withdraw from the 2004 United States Senate race due to an alleged sex scandal involving his relationship with his ex-wife, actress Jeri Ryan.[1][2] His eventual replacement, Alan Keyes, would go on to lose the general election to State Senator and future President of the United States, Barack Obama.

Individuals often lose their well guarded privacy as a consequence of the divorce process. The question many of my clients ask me pertains to how they can maintain their family’s privacy and not end up with the social and financial shocks that happen because of the way others view their marriages and lifestyles.

The core of the problem rests with the fact that a divorce is a lawsuit which takes place within the legal system. The public has a constitutionally-guarded automatic right to see all documentation filed with the courts. This public airing of dirty laundry is especially risky in a divorce situation because your court filings will center around 2 major areas: children and how you raise them and money – internal processes that most families keep private. In these 2 areas, divorce requires DEEP disclosure of all the intricate details of a parent’s finances and behavior. Adding to this is the fact that your actions within the divorce process are also publicly available. For example, how would your employer view it if you were sent to jail for contempt of court because of something filed by your ex wife?

So who can obtain this information about your family life, lifestyle and financial affairs?

• General public curiosity: Neighbors and others who simply want to gossip or sell your story.

• Business/Political associates and foes: Mark Rich, the famed financier pardoned by Bill Clinton, was actually revealed via his divorce from his wife Denise. In fact Barak Obama might even owe his presidency to information disclosed in Gov. Ryans divorce which led him to drop out of the race (in which he was the most popular candidate in the history of Illinois), leaving his young opponent Barak Obama to win the seat in Congress!

• Your former spouse: postings on facebook, myspace and dating sites have often been used in arguments that one parent or the other was either unfaithful or was derelict in their parental duties.

So what can be done to increase your level of privacy?

1) Consider a new venue: often switching the filing location can isolate the divorce from a curious public
2) Ask the court to seal sensitive records.
3) Hire a private judge
4) Use a collaborative or mediated process.

At Divorce Analysis we apply all of the above and more to help clients protect their privacy.

August 18, 2011 Posted by | Alimony, California Divorce, Child Support Calculation, Community Property, divorce, Prenuptial Agreement, Uncategorized | , , , , , , , , | Leave a comment

Divorce realities #1: Divorce lowers standards of living

Over the next few days and weeks, I will post some “divorce realities”.  These are simple facts that I have learned from working in many high net worth divorce cases.  While they are simple and short, they are powerful in that they apply to most situations.
Divorce Reality #1:  Your standard of living will, most likely, drop, the only question is: how much?

Married couples share costs for big items such as rent/mortgage, cars, even cable TV. There are also intangibles such as child care time or time spent cleaning the house. Once couples separate, each party will need to pay for these necessities separately, ie on their own. In the absence of more income, these costs will comprise a larger slice of each person’s income.

Consequently after a divorce, one should plan for higher costs, and, if living on half (or less) of the previous income, should consider budget cutting measures. Others do well with increasing their earnings by retraining or re-educating themselves.

Some people derive hope from laws saying that divorcees have a “right” to live at their prior standard of living. In fact these laws are themselves divorced from the economic reality that this “right” is impossible for both parties to make into “reality”. The true “reality” is in fact, exactly the opposite.

March 15, 2011 Posted by | Alimony, California Divorce, Child Support Calculation, Community Property, divorce, Uncategorized | Leave a comment

Divorce Financial Analysis Blog 1

The first of hopefully many blogs, this space has been created to share my thoughts on divorce and money.  So why does my opinion matter?  Well, here are my credentials

*  I’ve worked on over $100 million of divorces advising clients on how to best preserve and grow their money.  I only work with the best clients on high net worth divorces.

*  Economics degree from Stanford and an MBA from Harvard:  so I look at divorce as a financial transaction in a business context.   I have spent many years translating the legal constructs in a divorce into financial rules and analytical models

* The law is not economically rational:  my guess would be that the vast majority of divorces don’t end up at half.   There are laws governing divorce which we can make into “word problems”.  When we do this and try to solve the resulting equation, guess what?  The answer is etiher infinity or it is impossible to solve!  This means that some laws defy rationality!

*  I do more than accounting, I analyze.  Accountants COUNT but they aren’t as equipped to do financial analysis as I am.

If you were the CEO of a multimillion dollar enterprise and you wanted to do a merger or a spinoff, who would you call first?  Your lawyer? NO.  You would call your investment banker and ask him or her about the financial and tax implications of the transaction.  You would be very happy to pay them to structure the transaction.  Once this is done, then you call the attorneys.  So why do people call a lawyer first when they think of divorcing?  Perhaps they don’t know I exist.  (and thus, the blog)

Since my job is to make cold hard rational financial decsions, this is not the best place place to deal with emotional issues.

I am beginning a lecture series titled “Divorce and Money”.  The two presentations I have so far are:

“How to hire and manage a divorce attorney”

“Forensic accounting:  what it is and what it isn’t”

These will be given in the LA (Bel Air, Beverly Hills, Santa Monica) and San Francisco Bay (Palo Alto possibly Walnut Creek) Areas

July 27, 2009 Posted by | Uncategorized | 2 Comments