Month: March 2015

Don’t Invest When a Fund Manager is Divorcing

By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Divorce on Monday, March 30, 2015.

Have you ever wondered if your stock market investments are impacted by your broker’s divorce? A recent study from the University of Florida shows that divorce can have an impact on a funds stock market performance.

Knowing if someone is going through a divorce can be an investment decision. A hedge fund’s alpha – the measure of how much it beats the market – has been shown to fall by an annualized 7.39 percent during a divorce.

Busy fund managers, who manage larger funds and engage in high tempo investment strategies, are more affected by marriage.

The study also found that fund managers who depend on interpersonal relationships in their investment strategies are more affected by divorce. Behavioral biases may partially explain the connection between inattention and performance deterioration.

An even more surprising result is that marriage actually does more damage to a fund manager’s performance, according Dr. Sugata Ray, one of the paper’s authors.

I’ve written before about the impact that a divorce can have on stock performance by comparing the stock performance during Rupert Murdoch’s divorce and the divorce of Harold Hamm.

Divorce has always been a red flag for savvy investors. Hedge fund manager Paul Tudor Jones II, said he withdraws his money from a fund when a manager’s marriage breaks up.

“You can automatically subtract 10% to 20% from any manager when he is going through a divorce,” he told a conference in 2013.

(Jones also famously noted at that same conference that women who have children can’t be great traders, so perhaps we’ll take his opinion with a grain of salt.)

Younger fund managers tend to have more performance problems around a divorce. The annualized alpha of younger fund managers fell by 15.7% when they got divorced, while older managers only lost 4.1%.

One hedge fund manager, Ken Griffin, hasn’t been affected (yet) by marital strife. He is in the middle of one of the most public and nasty divorces in recent memory. Despite that, his company’s three big funds have continued to outperform the market.

Another big factor is whether a fund manager has partners to help steer the ship during a crisis. Managers that work alone “get clobbered when they go through marriages and divorces,” said Ray. “They start to fall prey to behavioral biases, like selling their gains and holding on to their losses longer than they should.”

The findings were based on data collected from 1994 to 2012, tracking 786 managers who went through 857 marriages and 251 divorces.

The CNN article is available here.

Do Rapists Have Child Custody Rights

By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Child Custody on Friday, March 20, 2015.

In 31 states, a man who impregnates a woman through rape can sue her for child custody and timesharing rights. There are bills pending in Ohio and Pennsylvania addressing that issue.

According to an NPR radio station in Pittsburgh, Pennsylvania State Senator Randy Vulakovich and Representative Joe Hackett are introducing the Rape Survivor Child Custody and Support Act in the Senate and House, respectively.

Under there bill, courts have the authority to terminate the parental rights of a father or mother convicted rapist. But at the same time, the rapist’s obligation to pay child support will remain.

I’ve written before about rape and custody. The issue of consent is important to the crime of rape, but is irrelevant in a civil action to determine paternity and child support.

Each year, there are approximately 32,000 pregnancies resulting from rape, according to a 1996 study by the American Journal of Obstetrics and Gynecology.

Vulakovich says his bill will close a loophole in the law that is damaging to sexual assault survivors.

“If a victim of a rape decides to keep a child who was conceived because of the result of a rape, she could be forced under state law to constantly interact with a rapist on a regular basis if he demands visitation rights.”

Currently in Pennsylvania, a rapist’s parental rights are only terminated pending adoption of the child, in which case the offender is no longer required to pay child support.

“We’ve had calls from women who are exasperated,” Houser said. “The callers will feel like…’I’ve done everything right, I’ve done all the things I was supposed to do, and now I find out that he’s petitioning for visitation.'”

According to the most recent data, a 1996 study by the American Journal of Obstetrics and Gynecology, approximately 320,000 women become pregnant as a result of rape. However, roughly one third of those pregnancies are terminated.

Houser says there are no clear statistics on pregnancy from rape in Pennsylvania. She also said few rapists try to pursue their visitation rights. State courts have the power to prevent unfit parents from claiming their visitation rights for several reasons, including crimes against the other parent.

“This isn’t necessarily the result of egregious things happening on a regular basis here in Pennsylvania,” Houser said, “but it doesn’t matter if it’s happening to a lot of people or just a few. It shouldn’t be happening at all.”

Without such a law, woman can endure years of being tormented by an abuser,” said Rep. Debbie Wasserman Schultz, D-Florida.

The article is here.

Alimony Reform Picking Up Press

By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Alimony on Monday, March 16, 2015.

The Miami Herald is reporting on the big changes to alimony being debated in a new bill. The Florida Legislature is considering a bill that would end permanent alimony, as well as set up formulas for time limits and amounts of alimony.

As the Miami Herald reports, Rep. Colleen Burton and Sen. Kelli Stargel, both Polk County Republicans, the sponsored bill (HB 943) which calls for payments that would last to between 25 and 75 percent of the length of the marriage.

I’ve written about alimony reform many times in the past, and especially the formulas for calculating both the amount and the term for alimony in earlier posts.

The bill’s supporters want an end to lifetime payments, saying recipients use existing law to extort a meal ticket even when they could work.

Opponents say ending permanent alimony would make it impossible for mothers to stay home with their children, for fear of being left destitute, and punish women who give up careers to keep a family functioning.

“You can find extremes on both sides,” exploited alimony payers and recipients not getting just compensation, Burton said. In many cases, she said, awards vary widely in cases with similar circumstances.

“We’re attempting to provide direction to the courts and some parameters as to what people can expect.”

Stargel has pushed alimony changes for years, including a 2013 bill that Gov. Rick Scott vetoed because it retroactively applied to divorces that were already finalized.

She said the new bill, which wouldn’t be retroactive, is a negotiated compromise and expects former opponents, including the Florida Bar’s family law section, to support it.

But supporters of the current system are strongly opposing the measure.

Cynthia Mayer of Ponce Inlet, a member of the First Wives Advocacy group, called the bill “anti-women and anti-traditional family,” and said it could put alimony recipients, 97 percent of them women, on welfare in their later years.

Another member, Cathy Jones of Lakeland, called it “the end of the stay-at-home choice for women in Florida.”

Jones said she quit work at her husband’s request while they were married so she could rear their children and create a social life to help his career.

Now, she said, he’s a millionaire whose hobby is exotic cars, while her net worth is $70,000; her mortgage won’t be paid off until she’s 84.

“Women like me are reliant upon alimony,” she said.

Asked whether Scott would back a bill that’s not retroactive, spokeswoman Jeri Bustamante said he “will review any legislation that comes to his desk.”

Florida Alimony Reform Update

By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Alimony on Wednesday, March 11, 2015.

With the Legislature in session, alimony reform in Florida is on the top of everyone’s minds. Last week I pointed out the heart of the new statute, alimony guidelines. But there are some other new updates in the bill.


Income and Potential Income

Under the current statute, income is not well defined. Under the proposed law, there will be an extensive list of what income is for alimony.

There is also a new item: “potential income”. Potential income is income which could be earned using your best efforts. In other words, if you were employed before, potential income is the income you could earn by working at a locally available, full-time job commensurate with your education, training, and experience. If you have investments, it would be the reasonably expected return from your investments.


Are you underemployed? Under the new statute, “underemployed” means you are not working full-time in a position which is appropriate, based upon your educational training and experience, and available near your residence.

Standard of Living

Standard of living was historically a major factor in awarding alimony. But under the proposed statute, the standard of living for two households will be presumed to be lower than a single-married household, and that judges must consider that fact.

Absolute Maximum Alimony Payment

The bill would limit the total alimony and child support payment by prohibiting the amount from exceeding more than 55% of the payor’s net income. Under the current statute there is no alimony maximum.

New Spouses

I’ve written extensively about the impact of a new spouse on discovery. Can you subpoena a new husband’s tax returns or take his deposition?

The financial information of a new spouse is inadmissible, and may not be considered as a part of any modification action, unless a party is claiming that his or her income has decreased since the marriage.

Even then, the financial information of the new spouse is discoverable and admissible only to the extent necessary to establish whether the party claiming that his or her income has decreased is diverting income or assets to the subsequent spouse that might otherwise be available for the payment of alimony.

Prevailing Party Attorneys’ Fees

The new bill requires the side that unnecessarily promotes or defends against an alimony modification to pay fees to the other side. This is popularly known as a “prevailing party” attorneys’ fee provision.

Besides the guidelines, which totally change the way alimony is decided in Florida, the new alimony reform bill contains a lot of new ideas and ways of deciding on the amount and term of alimony. The bill is something to follow.

House bill 943 can be read here.

March Madness: Florida Alimony Reform Update

By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Alimony on Friday, March 6, 2015.

March starts the new legislative session. For alimony reform, a House bill has already been filed which changes alimony. And we’ll have an insulting new name for marriages, they’ll be called: Low End Marriages.

I’ve written about alimony reform before. Florida may be getting alimony guidelines, which may take some guess work out of alimony, but many will be unhappy with the amounts and length of alimony.

How much will your alimony be? The bill proposes two ways to calculate alimony: one for High End marriages, and one for Low End marriages. Whether your marriage is “high end” or “low end” depends upon how long it lasts.

If the marriage is more than 20 years long, than it’s a High End Marriage. If 20 years or less, it’s a Low End Marriage.

Alimony in Low End Marriages

The low end of the alimony amount range is a simple calculation: (0.0125 x the years of marriage) x the difference between the monthly gross incomes of the parties.

Ex) For a 20 year marriage, where the Husband and Wife have a $10,000/month difference in income, the presumptive alimony award would be $2,500/month.

Alimony in High End Marriages

The high end of the alimony amount range is calculated at a 2% of the term of the marriage: (0.020 x the years of marriage) x the difference between the monthly gross incomes of the parties

Ex) In a 21-year marriage, where the Husband and Wife have a $10,000/month difference in income, the presumptive alimony award would be $4,200/month.

How Long Will Alimony Last

How long will alimony last? That will also be a calculation too. If the marriage is Low End, the duration is 25% of the length of the marriage. If High End, the term would be 75% of the length.

Ex) For a 20 year marriage, the presumptive alimony term would be 5-years.

Ex) For a 21 year marriage, the presumptive alimony term would last 15.75 years.

If this passes, you’ve got to at least love Florida’s official new terms for marriages as “low end”. Really? Why not call them “Trailer Trash Marriages”?

This is not an opinion blog, but really, who thought THAT up? How much alimony is a judge likely to award in a “low end”, cheap marriage?

If the legislative intent was to insult the institution of marriage, officially calling them “low end” is a great way to do it.

There will likely be changes to the bill. Whatever its final version, alimony reform in Florida appears likely. I’ll have more to say on Florida Alimony Reform in other posts.

The House bill is available here.

Cohabitation & Divorce

By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Divorce on Wednesday, March 4, 2015.

If you live together (cohabitate) before marriage, are you more likely to divorce? Put another way, what are the odds you’d be in your relationship if you hadn’t been living with your boyfriend or girlfriend first? The answer is: You wouldn’t be.

In a recent survey, respondents who had a firm commitment to marry before moving in together didn’t experience the low levels of commitment to the relationship. They were “deciding, not sliding.”

Scott Stanley, the co-director of Center for Marital and Family Studies, created a video which describes the joy-inducing chemicals released into the body at the start of a relationship – from dopamine to oxytocin – and how they can actually cloud our decisions.

Sexual activity increases the production of these chemicals, but even just going out to dinner with someone you’re falling for can have this effect. Under the “influence” of these drugs, the video explains, we start doing things that “lock us in” to a relationship. We get a joint cellphone plan, we co-sign a car loan, we adopt a dog together.

But after a few months, things may look different. Suddenly you wake up and realize that you don’t really want to be with this person. “You acted on the belief that you had a timeless love, but in reality you had a time-limited chemical high.” Yet you’ve made it extremely hard to disentangle yourself.

But it’s much more that keeps people in relationships past their expiration dates – including social restraints. People don’t assume the way they once did that shacking up is a step on the way to marriage, but most of your friends will still figure that living with a guy is a step closer to walking down the aisle.

For many women, that’s the point: Talk the guy into living with you, and you’re halfway to a ring. Many men aren’t thinking that. But, according to Stanley’s research, even the ones who do wind up proposing may have more regrets after the fact.

In a random-sample study published in the Journal of Marriage and Family in 2010, 20% of people who married before living together had divorced; the divorce rate was notably higher, 28 percent, for those who cohabited before even getting engaged.

The video suggests that people beginning a relationship keep their own apartments, cars and cellphone plans. Instead of a dog, maybe jointly adopt a goldfish.

The more you can get to know your possible life-mate without locking yourself in, the better chance you have of breaking up with the wrong person and finding the right one. This used to be called “dating.”

The New York Post article on the survey is here.