Category: Property Division

Settling Britain’s Largest Property Division Award

Billionaire Farkhad Akhmedov and his ex-wife Tatiana Akhmedova are settling Britain’s largest property division award of 450 million pounds. He will be paying her around 135 million pounds in cash and other assets to settle. The announcement ends the largest financial dispute that Britain’s divorce courts have ever seen.

International Divorce Rates

From Russia with Love

Tatiana Akhmedova, who is originally from Russia, decided to accept the cash and art settlement, which represents about one-third of the property division award she obtained in 2016. The parties’ settlement agreement ends a very bitter and long-running legal dispute.

The fight for assets has spanned at least nine jurisdictions since a London judge awarded Tatiana some 450 million pounds — amounting to 41% of Farkhad’s assets — in 2016. The Former Wife’s litigation budget in pursuing her settlement was expensive too. According to reports she had to borrow fund from a litigation finance group called Burford Capital Ltd., which stated it will receive $103 million.

“I will burn this moneys rather then will give her”

Farkhad said in a WhatsApp message to his son in March that year.

Florida Property Division

I’ve written about this case in the past along with the subject of property division in Florida many times before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.

Generally, courts set apart to each spouse their nonmarital assets and debts, and then distribute the marital assets and debts between the parties.

In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal. However, if there is a justification for an unequal distribution, as in the Akhmedov divorce, the court has the authority.

However, the court must base an unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.

It has been a long-standing rule in Florida that an unequal distribution of marital assets may be justified to compensate for one spouse’s “intentional dissipation, waste, depletion or destruction of marital assets after filing of the petition….”

Champagne Wishes and Caviar Dreams

The couple met in 1989, marrying four years later and moved to London. The marriage formally ended in late 2014.

A spokesman for her ex-husband Farkhad Akhmedov said:

The intervention in a case over which the English Court should have had no jurisdiction and the involvement of Burford ultimately achieved nothing for Tatiana. Burford and she spent years and millions of pounds on a costly global tour of various jurisdictions in their attempts to seize Luna. Every one of them failed and the yacht remains and will remain in the ownership of Farkhad and the family trusts. Tatiana has ended up with not a penny more than she was offered by her ex-husband six years ago. Farkhad has provided no payment to Burford. Those monies will have to be paid by Tatiana, thus reducing further to her the benefit of a settlement she could have had before the lawyers and financiers got involved.

The Former Wife was awarded a 41.5% share of her ex-husband’s £1 billion-plus fortune in late 2016. But he did not pay and she has spent years in courts in Britain and abroad in a bid to trace and seize his assets.

At one point she hired a team to try to secure her ex-husband’s enormous yacht, Luna, from a Dubai dock, led by former members of the British Special Boat Service – the naval version of the SAS.
Assets separately seized had included the yacht’s private £5million Eurocopter and its £1.5million Torpedo speed boat, customized with a 1965 Ferrari GTO steering wheel. A £40million global express jet had also been taken.

The Luna was sold to Farkhad in 2014 for £225million, has nine decks, space for 52 crew, two helipads, a vast swimming pool and a mini submarine. They are capable of acting as VIP transport and being lifeboats at the same time. Luna also has one of only two multipurpose custom made lifeboat-limousines in the world at a cost of over £2.8m each.

The Daily Mail article is here.

A Fast and Furious Divorce Property Division

Jordana Brewster’s divorce got expensive. The Fast and Furious star’s property division comes at a steep price as she has to buy out her ex-husband from their Los Angeles former marital home.

Fast & Furious 5,000,000

According to news reports, Brewster, 41, agreed to pay her ex-husband, Andrew Form, $5 million as part of their divorce settlement, The figure represents his half of their marital home in Los Angeles, which she will keep.

Additional details of the divorce settlement include that any income Brewster makes from the latest “Fast and Furious” movie is her separate, non-community property.

Her producer ex-husband also agreed that any income either earns “as a result of their personal and professional effort” from May 13, 2020 and beyond “shall be the separate property of the earning party.”

Neither Brewster nor Form will receive or pay spousal support. While a judge still needs to sign off on their agreement, Brewster and Form are legally single and co-parenting their two sons.

Florida Divorce and Property Division

I’ve written about houses and property divisions before. California is a community property state, but Florida is an equitable distribution state. In Florida, every divorce requires the court has to set apart nonmarital property, and distribute the marital property.

Florida judges always begin with the premise that the property distribution should be equal, unless there is a reason for an unequal distribution based on several factors.

One of the factors the court has to consider is the desirability of keeping the home for the kids or a spouse, if it’s equitable to do so, if it’s in the best interest of the child, and financially feasible.

Some spouses decide to sell but schedule the sale months or years into the future. This happens when a couple has kids, and both parents agree that the house shouldn’t be sold to preserve the school district or allow for easier timesharing.

There are other problems in a keeping a house in which your name is still on title. In the even that your ex-spouse does not pay the mortgage timely, your own credit will suffer the late notices.

And, if someone invited to your old home is hurt, that person will sue the record title owners for their damages. If your name is on title as an owner, that’s you! Making sure you have decent insurance on the house may be in order.

Many communities are experiencing a red hot real estate market. If you can’t wait for years, and need to sell immediately, there’s a silver lining in addition to this being a seller’s market. A fresh start and new beginning after a complete division of all of the assets tying you together with your Ex is the best way to go forward for some people.

However, there’s a cost of sale. When you sell your house, you pay a commission, and other expenses, like taxes, title expenses, repairs which can average about 10 percent of the sale price.

The California Marriage Massacre

Brewster and Form met while working on “The Texas Chainsaw Massacre: The Beginning.” Form was a producer on the film.

“We started dating in secret — you know, hanging out in my trailer — because it would have been unprofessional otherwise,” she previously told InStyle Weddings (via People). “But every day, Andrew wore these work boots to the set, and if I was lying down in the shot or there was equipment in the way, I’d look for his shoes. It was comfortable just to know he was nearby.”

They called it quits after 13 years of marriage in June 2020, and the actress filed for divorce the following month. In a deeply personal essay she wrote for Glamour, Jordana says she was compelled to divorce Andrew due to their vastly different schedules.

‘Most of why my marriage didn’t work was not my ex-husband’s fault,’ she said. ‘He loves work. He loves being on set, on location. I knew this from ages 27 to 32, but it became a problem for me once the kids were older. I wanted a partner.’

‘So, toward the beginning of the pandemic, Andrew and I decided to separate. The combination of being apart for most of the year for many years and growing apart emotionally took its toll.’

Just days after their separation, Jordana would reconnect with her current boyfriend Mason Morfit, whom she first met a few years earlier when they were both still married to other people.

‘Four days after I separated from Andrew, I was on a plane to San Francisco to visit this man I had met only once but who had stayed on my mind. I knew he’d been separated for two years. I wanted to see him, to confirm whether the image I’d built up in my mind matched reality. What I got was far more than I expected.’

During a time when the world avoided all contact, when it was mandated that everyone stay six feet apart, Mason and I blended into each other.’

The couple shared a five-minute long embrace and a kiss when they reunited at the airport. As far as Andrew, the movie producer has since moved on with actress Alexandra Daddario, who debuted their romance in May 2021 with a kissing snap.

‘I love you . . . and even that is an understatement,’ she captioned the photo.

The Fox News article is here.

Property Division and Embryos

Property division of a couple’s embryos is back in the news again, and will increasingly be an important part of any divorce case, as more couples seek In Vitro fertilization and other assisted reproductive technology.

property division embryo

Modern Family

Many people recall that Modern Family actress Sofia Vergara was in a dispute with her former partner Nick Loeb over frozen embryos. They ended their engagement in May 2014, the year after they underwent in vitro fertilization treatment together, and he tried to gain full custody of the fertilized eggs to have them implanted in a surrogate.

In February a court granted Sofia a permanent injunction which would stop her former partner from being able to use the fertilized eggs to “create a child without the explicit written permission of the other person”.

Do agreements matter? When Peter Goldin, a 44-year-old communications director, and his husband decided to start a family through in vitro fertilization, they faced mounds of paperwork at the fertility clinic deciding what should happen to any remaining embryos in the case of divorce or separation?

The couple, who used one embryo to have a daughter, decided that if they broke up, Mr. Goldin would be the one who decided what to do with their one remaining embryo, since it was created with his sperm and a donor egg.

But Mr. Goldin said that when he and his husband separated last year, his husband no longer wanted him to have sole authority to determine what would happen to the embryo. “He had forgotten what he had signed at the clinic,” said Mr. Goldin, who, with the help of a lawyer, ultimately gained custody after a month of back and forth.

Florida Property Division

I’ve written about the Vergara case and the subject of property division in Florida many times before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.

Generally, courts set apart to each spouse their nonmarital assets and debts, and then distribute the marital assets and debts between the parties.

Anyone who has been divorced knows the painful process well: disentangling finances, dividing possessions and mapping out custody arrangements for any children. And in recent years, with the use of artificial reproductive technologies on the rise, more couples have been confronting the even stickier question of what to do with frozen embryos.

In some states, consent agreements signed in fertility clinics, which can provide that embryos would be destroyed if the couple were to divorce have been determined to valid and enforceable contracts.

In New York, after a husband requested sole custody of the one remaining cryopreserved embryo and revoked his consent to use any of his genetic material, a court has narrowly read consent provisions and found such agreements permitted either party to withdraw consent to participation in the entire IVF process, and that the husband’s broadly worded revocation of consent was effective to revoke his consent to the continuation of the IVF process. The court awarded the remaining embryo to the husband, but only for the purpose of ensuring that NHF disposes of the embryo as provided in the Consent Agreement.

Divorce and Embryos

In the event of divorce, couples are not together anymore, probably don’t like each other, and if one person is going to use the embryo and have the child, that leaves the other person in an awkward spot.

For those who fail to plan for the worst, the results can be devastating. Couples who produce healthy embryos and freeze them for when they would be ready to have children face a problem years later when they want to divorce.

In many cases, judges have upheld agreements couples have signed at the fertility clinic, which say that the embryos could be brought to term only with the consent of both partners.

But as the New York Times reports:

“My state of mind at the time was complicated by cancer, being a newlywed and just this hope and opportunity to have children. It was unfathomable that that’s what would eventually determine that my last chance of having biological children would be taken away from me.”

Laws governing the disposition of frozen embryos vary from state to state. Judges have generally ruled in favor of the person who does not want to develop the embryo, but in Arizona, for example, the custody of disputed embryos goes to the party who wants to bring them to term.

Kathleen Pratt, 36, said that the process of poring over sheafs of legal documents to finalize the use of a surrogate led to several discussions with her husband, William, about what they would do with any remaining embryos if they divorced.

Ms. Pratt said her husband initially told her it made more sense to give her custody of remaining embryos — made with a donor egg and her husband’s sperm — because she was unable to have biological children. Then, Ms. Pratt said, she felt he should get to keep the embryos because they contained his genetic material, not hers.

Eventually they came to a decision: Neither should keep the embryos. Ms. Pratt, who lives in Charleston, S.C., remembers she and her husband saying to each other, “Why would we raise these babies outside of our family? If things go sour, let’s just call it a day.”

They ended up using both embryos to have a daughter in 2019 and a son last year. “I wouldn’t recommend anyone go through this with someone unless your relationship is solid,” she said.

The New York Times article is here.

Enforcing Your Multi-Million Dollar Property Division Award

Enforcing your property division award is world news when it arises in the divorce of Russian billionaire Farkhad Akhmedov and Tatiana Akhmedova taking place in a London courtroom. In a twist, Ms. Akhmedova is now suing her son for nearly $100 million in cash and assets to collect.

Property Division

From Russia with Love

Suing her son is a part of Ms. Akhmedova’s ongoing efforts to claim a portion of a $615 million divorce judgment, believed to be the largest in Britain’s history after a trial in 2016.

Her ex-husband has refused to hand over a single ruble and has kept his money, and himself, far away from Britain and the reach of its courts.

A new approach, enforce the award against her son, Temur, the older of the couple’s two sons, who is a U.K. resident who has plenty to seize.

His father gave his son a three-bedroom apartment next to Hyde Park worth about $40 million, when he was still in college, he is also the “registered keeper” of a $460,000 Rolls-Royce S.U.V., and is being sued under a theory that he is helping hide millions into trusts and tax havens around the world to frustrate his mother’s equitable distribution.

Florida Property Division

I’ve written about this case and the subject of property division in Florida many times before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.

Generally, courts set apart to each spouse their nonmarital assets and debts, and then distribute the marital assets and debts between the parties.

In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal. However, if there is a justification for an unequal distribution, as in the Akhmedov divorce, the court has the authority.

However, the court must base an unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.

It has been a long-standing rule in Florida that an unequal distribution of marital assets may be justified to compensate for one spouse’s “intentional dissipation, waste, depletion or destruction of marital assets after filing of the petition….”

Moscow on Thames

Since the collapse of the Soviet Union, London has been the place where rich and safety-minded Russians have parked their families, and at least some of their money.

The sons and daughters of these billionaires are now grown up, and Temur is part of a generation known for driving flashy cars and running up big tabs at posh restaurants in Knightsbridge and Mayfair.

In addition to mansions, a private jet, helicopters and masterpieces by artists like Rothko and Warhol, he bought a $500 million yacht, the Luna, from his fellow oligarch Roman Abramovich.

“It is 380 feet of floating luxury, with nine decks, space for 18 guests, a crew of 50 and — just in case — a missile detection system and bombproof doors.”

Allegations of infidelity made by both husband and wife led to divorce, but Mr. Akhmedov refused to even send a lawyer to the 2016 proceedings, arguing that the couple was already divorced. A court in Moscow dissolved the marriage in 2000, he said.

Temur is described in court as his father’s “lieutenant,” but he says he was more of a secretary than a second in command. When he lived and traveled with his father, he typed dictated messages, which he sent to Mr. Akhmedov’s team of advisers, bankers and lawyers. These were often instructions, adamant and profane, on how to evade Ms. Akhmedova and her financial backers.

One of Temur’s texts included a message about a plan to transfer about $100 million worth of art in Mr. Akhmedov’s collection from a storage facility in Liechtenstein to the Luna. The point of moving the works, Temur testified, was to make them readily viewable by his father.

“I don’t want to sound boasting or anything,” Temur replied, “but on a $500 million boat, $100 million paintings isn’t really something crazy. It’s nice to look at the paintings.”

Ms. Akhmedova testified first, and her tone reflected more sorrow than enmity. She’d helped her son decorate that deluxe apartment given to him by his father. But at some point she started to believe that Temur was part of an effort to thwart her pursuit of her divorce settlement.

Temur’s own time on the stand was far more tumultuous, once he actually showed up. On opening day, Dec. 2, he was in Moscow and said in open court, via video call, that he’d been advised that his mother’s lawyers might try to win a restraining order that could strip him of his passport.

Temur denounced his mother as opportunistic and greedy. She filed for divorce, he said, right after her now ex-husband sold Northgas. He said that she’d declined an out-of-court settlement of $100 million offered by his father, a sum the younger Mr. Akhmedov considered exceptionally generous given his mother’s history of infidelity.

The New York Times article is here.

 

Coronavirus Divorce Spike and Property Prices

The coronavirus divorce spike is having an impact on property prices. Many have heard that the financial impact of shutting down the economy, coupled with the stress of being in quarantine for months, is causing a surge in divorce rates. That increase is also impacting property values.

divorce property

House Hunters

In Great Britain, there has been a 42% rise in divorce inquiries between mid-March and mid-May, compared with the same period in 2019, according to the figures from Co-op Legal Services.

Based on the latest divorce data from the Office for National Statistics (ONS), this could mean an extra 38,346 couples could be calling it a day in 2020.

Some are speculating that therefore; the property market could see a boost of 38,346 homes entering the market if these additional divorces lead to the sale of the family home.

With the current average UK house price at £243,809, the addition of divorce properties hitting the market could total over £9.34bn ($11.85bn) in transactions for the property market, according to research from estate agent Barrows and Forrester.

Florida Divorce

I have written on the topic of divorce and coronavirus issues in the past. For many couples simply putting a shared home up for sale may seem like the simplest solution, but remember, that step won’t automatically erase all mortgage headaches or end the need to co-operate with your former spouse.

You will still need to agree on a realtor and asking price as well as determine how the continuing mortgage payments will be made. Will you be splitting the expense 50/50? Will the spouse who continues living there make the full payment?

If your home sells for more than the outstanding balance on the mortgage, how will the remaining proceeds be divided between you both after settling the joint debt? Worse, if you end up underwater on the mortgage, you’ll have to decide if you can even afford to sell it and how you’ll pay off the remaining debt if you do.

There are also the taxes. You can each exclude the first $250,000 in capital gains — the amount your home has appreciated in value since you bought it — from your taxable income, if the home was your primary residence and you owned it for more than two years.

If you opt to file a joint tax return, you can exclude up to $500,000. Earnings above that exclusion or on the sale of, say, a vacation property, could stick you with a tax bill.

Miami Divorce Spike and Property Prices

The surge in divorce filings and the impact on property owners, it is thought, could provide a much needed boost to the industry which saw market activity slow to a trickle for much of the lockdown as the UK government urged against house moves, with many estate agents shutting their doors with physical viewings and valuations off the cards.

The coronavirus sparked the biggest monthly fall in UK house prices since 2009, according to lender Nationwide’s closely followed house price index.

The same is true in Miami, where home sales in South Florida plummeted in April. Sales of both condos and single-family homes dropped nearly 40% in Miami-Dade and Broward from the same month in 2019.

Incredibly, median prices continued to increase. Median prices rose for both single-family homes and condos, despite the pandemic and drop in sales. Sales under contract in February and March, closed in April, reflecting a strong first quarter.

The median price for single-family homes grew by 7.3%, from $356,000 to $382,000. The median condo price increased by 6.9%, from $248,000 to $265,000.

More than 90% of median-priced single-family homes and condos sold for at or near the asking price. Cash transactions comprised 22.1% of all transactions, down from 34.8% in April 2019. That’s still more than the national percentage of 15%.

However, some think divorce property on the market could lift property stock and keep prices up amid a considerable increase in buyer demand since the industry lockdown was lifted in May.

Unfortunately, divorce is an inevitable aspect of modern-day life and one that has been exacerbated as a result of a lengthy lockdown at home with our significant other. It’s also one of three influences that regularly see properties come to market, along with death and debt, as couples look to divvy up their existing assets in order to move on in life.

The one positive of this is there has been a huge uplift in buyer demand since the property industry reopened last month but a continued hesitance by some sellers to list and this stock boost should help meet this demand while helping keep house prices buoyant.”

The UK Yahoo article is here.

 

Property Division and the Family Castle

For many American families, their home is their castle. When divorce is on the horizon, your castle may fall under attack. Florida’s property division statute requires an equitable distribution of all marital property, but it is not a how-to guide. Money magazine has an article looking at some of your options.

Property Division Castle2

The Coronavirus Crash

Before the silent enemy Covid-19 hit us, the median value of a home in the U.S. was $247,084, and the average amount of mortgage debt a person topped $202,000.

With many experts predicting the coronavirus siege will lead to a surge in divorce, deciding how to deal with your marital home – and its accompanying debt – can be a dangerous financial burden in every case. Below are some strategies to defend your castle.

Selling the Castle

For many couples simply putting a shared home up for sale may seem like the simplest solution, but remember, that step won’t automatically erase all mortgage headaches or end the need to co-operate with your former spouse.

You will still need to agree on a realtor and asking price as well as determine how the continuing mortgage payments will be made. Will you be splitting the expense 50/50? Will the spouse who continues living there make the full payment?

If your home sells for more than the outstanding balance on the mortgage, how will the remaining proceeds be divided between you both after settling the joint debt? Worse, if you end up underwater on the mortgage, you’ll have to decide if you can even afford to sell it and how you’ll pay off the remaining debt if you do.

There are also the taxes. You can each exclude the first $250,000  in capital gains — the amount your home has appreciated in value since you bought it — from your taxable income, if the home was your primary residence and you owned it for more than two years.

If you opt to file a joint tax return, you can exclude up to $500,000. Earnings above that exclusion or on the sale of, say, a vacation property, could stick you with a tax bill.

Keeping the Home

Divorce upends life, and it makes sense that a majority of the time at least one spouse isn’t ready to leave the marital home and add the stress of moving to their to-do list.

The idea of remaining in a familiar, comfortable home can seem even more compelling when there are children who might have to change schools or leave behind friends.

But many financial advisors and divorce attorneys caution against keeping your old home after a divorce, calling it one of the biggest mistakes you can make during the process.

If you want to remain living in the home you once shared with your ex-spouse, you need to carefully review your budget and weigh whether you can individually afford it.

Refinancing the Mortgage

If you have $50,000 in equity in your current home and you’ve agreed to a 50-50 split of its value, you’ll need to come up with $25,000 to buy out your former spouse. In return, your ex-spouse should remove their name from the property title, typically using a quitclaim deed.

If you don’t have the cash, you might need to give up other assets in the divorce negotiations equal to the home’s equity, such as your investment account, 401(k) or IRA.

However, qualifying as a single person can be challenging as lenders will examine your individual earnings, credit history, and savings to see if they believe you’re capable of repaying the loan.

Staying Co-owners of the Manor

If you are unable to refinance or payoff the mortgage, you may be able to keep the status quo. This is not recommended, as it requires a high degree of trust in your former spouse.

Since both your names will remain on the home and on the mortgage, you’ll both be liable for making payments. Should your ex-spouse stop contributing their share, you could face more debt, foreclosure, bankruptcy or poor credit.

Florida Property Division

I’ve written about houses and property divisions before. In Florida, every divorce proceeding the court has to set apart nonmarital property, and distribute the marital property.

Florida judges always begin with the premise that the property distribution should be equal, unless there is a reason for an unequal distribution based on several factors.

One of the factors the court has to consider is the desirability of keeping the home for the kids or a spouse, if it’s equitable to do so, if it’s in the best interest of the child, and financially feasible.

However, whether keeping the home for yourself or the kids is financially feasible requires you to have an honest look at what you can and can’t afford. Some strategies to keep the home include:

Raiding Savings

While not the best solution, pulling from savings can help you keep hold of the home. By obtaining a court ordered qualified domestic relations order or QDRO, you can gain access to a portion of your ex-spouse’s employee retirement plan assets.

Such funds may not be subject to the 10% early withdrawal penalty for people under age 59.5, meaning you’ll save more on taxes by using this money to secure your home than you would by tapping other accounts you may have.

Alternatively, if you have Roth IRA savings, you could pull an amount equal to what you’ve contributed tax and penalty free, again making it a smarter way to meet your mortgage payment needs.

Raising Rents

If you’re really determined to keep the home, but cannot pull from savings or refinance, it might be worth brainstorming ways you can earn income from it to help cover the mortgage and upkeep costs.

Renting out the whole home while you’re on vacation – or even just a bedroom or two when in town – could make you hundreds a night. Airbnb hosts, for instance, can make over $900 a month according to research.

If you can’t refinance the mortgage in your own name, keeping the home isn’t a wise decision. It is better to restructure your life in a way that makes sense in the long run, rather than pillage your other financial accounts.

The Money article is here.

 

Big British Property Division Case

A British woman who “sacrificed” her career as a lawyer so she could be a stay-home mum and raise her children has won an unequal property division on top of an equal share of the family’s wealth after her divorce. This case proves that the interruption of your career can impact your divorce.

Merry in England

A woman who “sacrificed” her career as a solicitor so she could look after her children has won compensation on top of an equal share of the family’s wealth after her divorce.

The ruling could have implications for other divorce cases in which one partner has stepped back from their career for the good of the family, a lawyer said. The Cambridge graduate was embroiled in a fight over cash with her millionaire husband, who is also a solicitor, after the breakdown of their marriage.

A judge has decided the pair, who were married for about a decade and have two children, should split assets of nearly £10 million equally but that the woman should get another £400,000 in compensation for curtailing her legal career.

Mr. Justice Moor said there had been “relationship-generated disadvantage” as the husband was still able to enjoy a “stellar” career.

[The woman] viewed herself as the parent who would take primary responsibility for the children. The husband’s career took precedence. I accept that it is unusual to find significant relationship-generated disadvantage that may lead to a claim for compensation but I am clear that this is one such case. I have come to the conclusion that an appropriate sum to award for relationship-generated disadvantage, over and above her half share of the assets, is the sum of £400,000.

As a talented lawyer, our client sacrificed a potentially lucrative career for her family and to care for the children. Although Mr. Justice Moor has made clear this decision should not open the floodgates to a raft of relationship-generated disadvantage claims, the judgment affirms that in truly exceptional circumstances the principle of compensation still exists in family law, and rightly so.

Florida Property Division and Careers

I have written about property division before. Florida’s equitable distribution statute begins with the premise that the distribution should be equal, but the trial court may make an unequal distribution when proper justification is demonstrated.

The equitable distribution statute lists several factors for a trial court to consider in making this determination, and the court must support its equitable distribution scheme with specific factual findings.

As in the recent England case, a Florida trial court follows several factors to support an unequal distribution, including: what were the contributions to the marriage by each spouse, the economic circumstances of the parties, the duration of the marriage, and the interruption of personal careers.

Generally, the fact that one spouse is the primary bread winner won’t support an unequal distribution in Florida.

Stiff Upper Lip

In another British case, a businesswoman who left behind her career in order to become a “stay at home mum” while her husband continued with his high-flying career has been awarded virtually all of the family fortune by a divorce judge.

Jane Morris, 52, had been criticized by her former husband for not bringing more money in after they split, having quit her career as a recruitment consultant to keep house for him and their three children for 20 years.

However, it emerged that she was awarded half a million pounds while husband, Peter Morris, the managing director of a software company with a seven-figure turnover, was left with just £66,000.

Details of the case came out as he launched a challenge in the court of appeal against the financial outcome of the divorce and a six-week prison sentence which is hanging over his head after it was imposed on a suspended basis for non-payment of alimony and support.

The court heard that the 51-year-old businessman “took credit” for the “high standard of living” the couple enjoyed in their £1.2m cottage in the Chiltern Hills.

However, the couple’s “extravagant” spending, both during their marriage and after their “bitterly contested” break-up in 2013, brought them “to the brink of financial disaster”, reducing multi-million-pound family assets to just £560,000.

Awarding 90% of the family assets to her, the judge had said that she “needs adequate maintenance” because sacrificing her career had left her with a “low earning capacity… in her middle fifties with rusty skills.”

Morris had hit out at his wife’s own expenditure and criticized her for not earning more, having re-entered the labor market since they separated. But she was ruled to be “a sensible woman” who was “probably in need of emotional and psychological comfort” during her own spending sprees.

The Guardian article is here.

 

Divorce and Business Property Division

When one of Zach Hendrix’s three business partners said he was getting divorced, sympathy turned into shock as everyone realized that a soon-to-be ex-wife could become a co-owner. Understanding the law around business and property division in a divorce is the first step to protecting yourself.

business property divisions

Open for Business

When a small business owner divorces, the company can become part of a property fight; the battle can end with owners losing all or part of their businesses. Or, they or the company may be forced to take on debt to prevent an ex from sharing ownership.

Even when ownership isn’t at stake, the rancor and uncertainty around a divorce can take a toll on a company — owners may be distracted and unable to focus on what the business needs.

Hendrix and two of his co-owners had to borrow a combined $250,000 to buy out their partner in 2017 after he announced his divorce plans. A startup, and not in a position to get that much credit, the three had to personally guarantee the loans. They were able to repay the debt in a year and a half out of their profits.

The divorce was a learning experience for the partners. When they started, they hadn’t written what’s known as a buy-sell agreement that creates a process and sets a price for buying out a partner.

Florida Business Property Division

I have written about property division recently. Florida is an equitable distribution state when it comes to dividing businesses in divorce.

In a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, a court must set apart to each spouse that spouse’s non-marital assets and liabilities.

There are several factors to know whether a business interest is marital. First, you will need to look at the date of marriage and the date the business interest was acquired.

Additionally, you should look to the source of funds used to start the business, and also if there were money and labor contributions to the business given by either spouse during the marriage. In distributing the marital assets and liabilities between the parties, the court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution.

Whenever an agreement cannot be made between the spouses, the court’s distribution of marital assets or marital liabilities must be supported by factual findings and be based on competent evidence.

Once you have determined whether an interest in a business is marital, how do you actually determine what that interest is worth?

There are three approaches to value a business interest: (1) the asset approach; (2) the income approach; and (3) the market approach.  Each approach has inherent strengths and weaknesses.

Any valuation expert should consider all three approaches; however, it is often the case that all three approaches cannot be applied.

Back in business

The emotional fallout from a divorce can affect co-owners and employees. In his settlement with his wife, Jeffrey Deckman agreed to pay her $100,000 over four years; that amount was half what his telecommunications business was valued at.

Deckman borrowed money to make the payments, but having that debt hanging over him created stress that spilled over to his company.

“I started getting edgy, short-tempered, pushing hard for (sales) numbers that I never pushed so hard for before.”

He began fighting with his two business partners, and the discord affected everyone who worked there. It took six months for Deckman to realize what he was doing. “It showed me on a certain level that I hadn’t accepted responsibility for the deal I made,” he says.

But by the time Deckman understood that “I was making people pay,” he had damaged his relationship with his partners and staffers. In 2005, two years after the divorce, he realized that he needed to withdraw from working in the company, and in 2008 he sold his stake. Deckman, who now does consulting for small and mid-sized companies, believes despite losing his share of the business that he did the right thing in his divorce settlement.

He says of his ex-wife: “Today, years later, we are great friends and our children benefit greatly because of it.”

The Detroit News story is here.

 

The Art of Divorce

Dividing assets in a divorce is not only a requirement, it can be a difficult aspect of a divorce. If so, valuing an art collection is singularly one of the most disputed parts of a divorce. Not only is valuation a problem, but people are emotionally attached to their artwork as one billionaire couple in New York has found out.

art of divorce

Billionaire’s Row

The ex-husband is Harry Macklowe, a real estate developer. The ex-wife is Linda Macklowe, an honorary trustee of the Metropolitan Museum of Art, who is passionate about collecting modern art.

Together they have accumulated a $72 million apartment, so large it runs the full length of one side of the Plaza Hotel, with windows overlooking Central Park. A second Manhattan apartment is high up in one of the tallest buildings in the Western Hemisphere, along the so-called Billionaires’ Row.

Their $19 million house in the Hamptons on Long Island has neighbors with boldface names, including Martha Stewart and Steven Spielberg. The $23.5 million yacht is a 150-foot-long prizewinner.

And then there is the art collection, an enormous trove of masterpieces that the judge presiding over the divorce described as “extraordinary” and “internationally renowned” and that has become the latest chapter in the exes’ rancorous unraveling. Among the more than 150 pieces are multiple works by Pablo Picasso, Jeff Koons, Willem de Kooning and Mark Rothko.

The exes’ lawyers have fought about what most of them were worth — one rare moment of agreement came when two art experts hired separately by the exes both valued an Andy Warhol creation filled with images of Marilyn Monroe at $50 million — and who should get them.

Florida Property Division

I have written about property division before. Florida is an equitable distribution state when it comes to dividing art in divorce. In a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, a court must set apart to each spouse that spouse’s nonmarital assets and liabilities.

In distributing the marital assets and liabilities between the parties, the court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution.

Whenever an agreement cannot be made between the spouses, the court’s distribution of marital assets or marital liabilities must be supported by factual findings and be based on competent evidence. Whether the court distributes artwork equally or not, the court must make specific written findings of fact as to each marital asset and the individual valuation of significant assets, and designation of which spouse shall be entitled to each asset.

Because an effective valuation is important, most attorneys will hire an expert appraiser to provide the appropriate report and testimony to the court.

It’s Up to You New York, New York

The Macklowes’ divorce comes with the twist of an impressive art collection that has been valued at as much as nearly $1 billion. In 2016, Mr. Macklowe told Ms. Macklowe that the marriage was over. By the end of last year, the Macklowes’ divorce had been granted. Mr. Macklowe then put giant images of himself and Patricia Landeau, his new wife, on the side of a luxury condominium building in Manhattan that he built.

But the wrangling continued over how to divide an art collection that David N. Redden, a former vice chairman of Sotheby’s, called “fairly staggering” and “one of the great prizes.” In the Macklowes’ divorce, the former spouses had to unload the art “to sustain their lifestyle. They don’t have the cash.” About 60 to 75 percent of their assets were tied up in the art collection.

As for the value of the art, during the lower-court proceeding, each side hired an expert to appraise the art. Mr. Macklowe’s expert estimated the value at $788 million; Ms. Macklowe’s expert said $625 million.

“If this had been a case with one or two fewer zeros, it would be an ordinary kind of dispute. Because of the prominence of the parties and the amount of money involved, this is a case that attracts natural attention.”

Ms. Macklowe did not want to let anything go. “She stated that she wished to enjoy the collection and sell individual pieces only as necessary to support her standard of living.” That would have posed tax problems for Mr. Macklowe. The wife wanted all the major pieces of art to go to her, and she would decide what to sell and when to sell it. The husband would have to pay taxes on what would be sold, because the value that would be attributed to the works would be the after-tax value. She would keep the art, the art would get sold and he would pay the taxes.

The New York Times article is here.

 

The Art of Property Division

Developer Harry Macklowe and his wife, Linda, were ordered to split their “internationally renowned collection” of modern art from the likes of Andy Warhol and Alberto Giacometti in a property division case involving hundreds of millions of dollars.

property division

Who Needs Nine Marilyn Monroes?

A New York court in Manhattan ruled that the Macklowe art trove amassed during 59 years of marriage should be sold and the profits shared.

In a sign of the acrimony that fueled a prolonged legal dispute, the couple couldn’t agree on what the collection was worth — Harry’s expert said $788 million, while Linda’s said $625 million.

Their collection, which encompasses some 165 pieces of art, among them Andy Warhol’s Nine Marilyns which is estimated to be worth $50 million, Le Nez by Alberto Giacometti, worth up to $35 million, Jeff Koons Vest with Aqualung for $10-11 million, and Jackson Pollock, Number 17, valued at up to $35 million..

Florida Property Division

I’ve written about property division in Florida. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.

Generally, courts set apart to each spouse their nonmarital assets and debts, and then distribute the marital assets and debts between the parties.

In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal.

However, if there is a justification for an unequal distribution, the court can give less than equal. When a court orders an unequal distribution, it must base the decision on certain factors, including some of the following:

  • The contribution to the marriage by each spouse.
  • The economic circumstances of the parties.
  • The duration of the marriage.
  • Any interruption of personal careers or educational opportunities.
  • The contribution to the personal career or educational opportunity of the other spouse.
  • The desirability of retaining any asset.
  • intentional dissipation, waste, depletion, or destruction of marital assets.
  • Any other factors necessary to do equity and justice between the parties.

The courts don’t even have to wait for the end of the case to start a property division. Florida law allows courts, if they find good cause that there should be an interim partial distribution during a divorce action, to equitably distribute property sooner.

The Nose Knows

After a 14-week trial last year, the divorce judge determined in a 65-page opinion how to split all the assets held by the 81-year-old developer and his wife, who is on the board of the Metropolitan Museum of Art.

Linda will get to keep $40 million in art but will have to pay half of that to Harry, she’ll get to keep their 14,000-square-foot apartment at the Plaza Hotel valued at $72 million but have to pay her estranged spouse $36 million for his share. Harry will retain ownership of $82 million in commercial real estate — including 737 Park Ave. — but pay Linda $41 million.

The couple will split the $62 million they have in cash, the judge said.

Linda Macklowe gets to keep another $40 million of art — including works by Koons and Picasso, but must pay Harry $20 million in credit, the judge said.

The couple were married Jan. 4, 1959, when he was a 21-year-old ad salesman for Parents Magazine and she was 20, working as a receptionist. They had no prenuptial agreement.

The Bloomberg article is here.