Tag: Property Division Waste

Settling Britain’s Largest Property Division Award

Posted by Ron Kauffman on

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.

Today’s Property Division

Posted by Ron Kauffman on

According to People, former Today Show anchor, Matt Lauer, is finalizing his divorce with Annette Roque. The settlement is rumored to involve him paying his wife up to $20 million. The details of the property division however is unknown, but is a reminder that divorce property division laws in Florida recently changed in a big way.

Property Division

Good Morning Property Divisions

According to People, the couple, who wed 20 years ago in 1998, has agreed to share custody of their children. He is rumored to have a lot of guilt and wants to make sure Annette is taken care of.

Reportedly:

They seem happier and their family and friends are thrilled to see they are both moving forward.”

Left unsaid in the article is what happens to the $7 million coop in New York City, the Hamptons beachfront estate he bought for $36 million from actor Richard Gere, his Sag Harbor home, and other properties.

Florida Property Division . . . and Friends

I’ve written about property division 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 non-marital assets and debts, and then distribute the marital assets and debts between the parties.

Marital assets and liabilities include, in part, assets acquired and liabilities incurred during the marriage, individually by either spouse or jointly by them.

Passive Appreciation and Morning Joe

Passive appreciation of a nonmarital asset may also be a marital asset the court must equitably distribute. For example, Lauer bought his upper East Side apartment for roughly $6 million, but has it listed for over $7 million.

In 2010, the Florida Supreme Court held that “passive appreciation of a nonmarital asset … is properly considered a marital asset where marital funds or the efforts of either party contributed to the appreciation.”

The Florida Supreme Court created a formula for courts to use in determining the value of the passive appreciation of nonmarital real property for equitable distribution.

But the formula was flawed because there is no relationship between the amount of marital funds used to pay down a mortgage during a marriage, and the passive appreciation of the property.

Also, the case requires a nonowner spouse to have made contributions to the property as a prerequisite to sharing in the passive appreciation of the property.

Live with Kaaa

Recently, Governor Scott signed a bill to fix the problem. The bill amends our equitable distribution statute and establishes a statutory formula for courts to use.

The new statutory formula does not require the nonowner spouse to have made contributions to the property, and also bars the marital portion of nonmarital real property from exceeding the total net equity of the property on the valuation date in the divorce action.

The People article is available here.

 

Divorce Waste and Property Division

Posted by Ron Kauffman on

An English ex-husband has ‘come under fire’ after he admitted to burning down his marital home out of anger over his divorce. This sad event raises the issue of waste in divorce, and how courts can order an unequal property division when assets are destroyed.

Divorce Waste

‘Great Balls of Fire’

According to the Mirror, Paul Duffy appeared at Leicester Magistrates’ Court to admit to a charge of arson at his home in England. Emergency services were called to a ferocious blaze at his address in the early hours of Tuesday morning.

The house is almost completely destroyed due to arson. An investigation into the blaze found 27 individual seats of fire, two jerry cans and evidence of flammable substances and petrol.

The fire caused an explosion at the property and the house next door was damaged, although no-one was inside the address. Duffy left, but later returned to the scene, where he gave himself up to police officers and was arrested.

In interview he made a full and frank admission of his role in starting the fire.

Florida Divorce Waste

In Florida divorces, courts distribute the marital assets and liabilities between the parties every day. Judges have to start with the premise that the distribution should be equal. But is there a way ‘to fight fire with fire’ if a spouse destroys marital property?

In Florida, courts are allowed to distribute property unequally if there is a justification for an unequal distribution. I’ve written about this concept of waste, and other aspects of property division before.

One of the relevant factors courts look to is whether one of the parties intentionally dissipated, wasted, depleted, or destroyed any of the marital assets after the filing of the petition or within 2 years prior to the filing of the petition.

There are many examples, besides arson, of spouses dissipating or wasting assets. Other instances of people ‘pouring gasoline on the fire’ include spending money buying a girlfriend jewelry or lingerie, gambling losses, and drug usage.

Some people get ‘fired up’ over their divorce, and would rather lose the money outright than split it with their spouses.  Where this kind of marital misconduct results in a waste of marital assets, it can serve as a basis for unequal division of marital property.

‘Burning down the house’, one of the largest assets in a marriage, would be a good reason to justify an unequal distribution of the property in divorce. It’s Florida’s way of saying: ‘if you play with fire you’re gonna get burnt.’

‘Fire Away’

According to reports in England, the husband had left the area after starting the fire but later returned to the scene, where he gave himself up to police officers and was arrested.

The house was not insured. The house was ruled to be unsafe and had to be demolished later that day. The husband is now facing jail. Clearly, the husband has jumped ‘out of the frying pan into the fire.’

The Mirror article is here.

 

Ocean’s 492 Million: Divorce Fraud

Posted by Ron Kauffman on

A London court ordered the seizure of a $492 million yacht in Dubai, to enforce one of the largest divorce property divisions in history. The reason for the large payout? The family law judge found that the husband tried to hide his assets.

© A.Savin, Wikimedia Commons

Cruisin’ for a Bruisin’

The British court ruled that Farkhad Akhmedov should transfer ownership of the 380-foot boat MV Luna, currently impounded in a dry dock in Dubai, to his wife, Tatiana Akhmedova. The judge granted the order to uphold his earlier $646 million judgment.

Judge Charles Haddon-Cave said that Akhmedov tried to hide his ownership of the Luna behind a group of companies and moved the ship to Dubai on the belief that it was “well beyond the reach of an English court judgment.”

Fraud and Unequal Distribution

I’ve written about 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….” For example, hiding your $492m yacht in the Middle East.

High Seas Adventure

In the final days of the divorce, the billionaire changed his ownership of the yacht to another of his companies. The transactions form part of the billionaire’s “continuing campaign to defeat Akhmedova by concealing his assets in a web of offshore companies.

The Luna, which boasts a 20-meter outdoor swimming pool and eight smaller boats, also has a mini-submarine.

Akhmedov said he had supported his wife after their marriage was dissolved in Russia. He blamed cynical lawyers for later filing for divorce in London, and U.K. politics for the court’s decision.

The couple met in 1989, marrying four years later and moved to London where the wife has lived with the children ever since. The marriage ended in late 2014.

Akhmedov, who refused to take part in the U.K. trial and moved back to Russia, has allegedly moved his substantial modern art collection, valued at 90.5 million pounds, to Lichtenstein, his wife said in the court documents in January.

The judge said that they needed to move quickly to enforce the order over the boat. Akhmedov “has over the past 18 months repeatedly demonstrated a willingness to take rapid and multifarious steps to evade enforcement at every turn.”

The Bloomberg article is here.

 

Divorce Auction

Posted by Ron Kauffman on

Russell Crowe sold dozens of items this past weekend at a Sotheby’s auction to help him fund his divorce from ex-wife Danielle Spencer. The auction appears to have worked better than expected.

The Art of Divorce

Crowe titled the event “The Art of Divorce,” the divorce auction took place in Sydney on his 54th birthday and featured more than 200 items, including movie memorabilia, antique treasures, artwork and a collection of instruments.

A replica Roman chariot from the same movie in which Crowe played the general-turned-gladiator Maximus, thought to be worth up to AU$10,000, was sold for AU$65,000.

Sotheby’s had estimated the sale would bring in up to AU$3.7m (more than $2.8 million in U.S. dollars), but many items sold for more than their original pricing.

Florida Property Division

In Florida, courts distribute marital assets and liabilities between the parties with the premise that the distribution should be equal unless there is a justification for an unequal distribution. Although it may seem like it, equitable distribution is not an auction.

I’ve written about various aspects of property division before, including Russell Crowe’s proposed auction when it was first announced.

Marital assets are properties acquired and debts incurred during the marriage, individually by either spouse or jointly by them.

Marital assets and liabilities also include the enhancement in value and appreciation of non-marital assets resulting either from the efforts of either party during the marriage.

Dissipation and Waste

One of the relevant factors courts look to in property division is whether one of the parties intentionally dissipated, wasted, depleted, or destroyed any of the marital assets after the filing of the petition.

Spouses can dissipate assets by giving away money irresponsibly, spending money on girlfriends, gambling losses, and drug usage. Some people would rather lose the money outright than split it with their spouses.

If the dissipation of an asset resulted from misconduct, the question is whether a spouse used marital funds for his own benefit unrelated to the marriage at a time when the marriage was undergoing an irreconcilable breakdown.

Misconduct is not mismanagement or even a simple squandering of marital assets in a manner of which the other spouse disapproves. There is no report that the Crowe auction was a waste of assets.

Instead, there has to be evidence of the spending spouse’s intentional dissipation or destruction of the asset. Where marital misconduct results in a depletion or dissipation of marital assets, it can serve as a basis for unequal division.

Alternatively, courts can look at the misconduct, and can assign to the spending spouse as part of their equitable distribution, the misconduct losses.

Battle for the Jockstrap?

Among the most popular items at the auction was the breastplate he wore in “Gladiator” when his character Maximus (spoiler alert) bites the dust. The piece sold for $125,000 while matching leather wrist cuffs scored $32,000.

Crowe also sold items from movies like “Master and Commander,” “The Silver Brumby” and “Proof,” though the Royal Navy dress blues from “Master” proved extremely popular, bringing in a $115,000 haul.

One of the more curious items was the leather jockstrap Crowe wore in the 2005 film “Cinderella Man.” The protective piece went for $7,000 to one lucky bidder.

“I put it in the collection as a piece of whimsy and a bit of a gag. Funny enough, it’s garnered a lot of attention,”.

He and Spencer wed in 2003, and news broke of their split in 2012. The divorce is just about finalized, and the ex-couple share two children.

The auction raised money for the A.C.M.F. charity, which provides free music education and instruments to disadvantaged and indigenous children and youth at risk in Sydney.

The New York Times article is here.

 

When Gladiators Divorce

Posted by Ron Kauffman on

Actor Russell Crowe has filed for divorce, and will auction off his jewelry, mementos and other property. Will selling his assets before the divorce has ended maximize his property division, or will he be eating crow?

Enter the Coliseum

According to Australian news, Sotheby’s Australia will host an auction titled “The Art of Divorce” in which 227 different items from Russell Crowe’s private life will go up for sale.

The auction will take place on April 7, on what would have been his 15th wedding anniversary.

Rare movie memorabilia will be in the auction including:

  • The armor from Gladiator as Maximus will go under the hammer. The armor is expected to fetch $30,000, while a sword used in the film could sell for $4000.
  • A working chariot from the set of Gladiator will sell for between $5000 and $10,000.
  • A 2001 Mercedes, valued between $15,000 and $25,000, is also in the lot, along with two motorcycles that could command top dollar.

According to Crowe:

Divorce has its way of making you really examine the things that are essential in life — and the things that are not

Through the process I had a look around and realized I had a lot of stuff. Career stuff, stuff I’ve collected, and stuff in general. Boxes and boxes of stuff … so in the spirit of moving forward into fresh air, here’s a portion of that collection of stuff.

Although news reports are unclear whether the auction of the assets are planned in cooperation with his soon to be ex-wife, or his own, generally people should be cautious selling property after filing for divorce.

Florida Property Division

In Florida, courts distribute marital assets and liabilities between the parties with the premise that the distribution should be equal, unless there is a justification for an unequal distribution. I’ve written about various aspects of property division before.

Marital assets are properties acquired and debts incurred during the marriage, individually by either spouse or jointly by them.

Marital assets and liabilities also include the enhancement in value and appreciation of non-marital assets resulting either from the efforts of either party during the marriage.

Dissipation and Waste

One of the relevant factors courts look to in property division is whether one of the parties intentionally dissipated, wasted, depleted, or destroyed any of the marital assets after the filing of the petition.

Spouses can dissipate assets by giving away money irresponsibly, spending money on girlfriends, gambling losses, and drug usage. Some people would rather lose the money outright than split it with their spouses.

If the dissipation of an asset resulted from misconduct, the question is whether a spouse used marital funds for his own benefit unrelated to the marriage at a time when the marriage was undergoing an irreconcilable breakdown.

Misconduct is not mismanagement, or even a simple squandering of marital assets in a manner of which the other spouse disapproves.

Instead, there has to be evidence of the spending spouse’s intentional dissipation or destruction of the asset. Where marital misconduct results in a depletion or dissipation of marital assets, it can serve as a basis for unequal division.

Alternatively, courts can look at the misconduct, and can assign to the spending spouse as part of their equitable distribution, the misconduct losses.

As the Crowe Flies

The Crowes separated in 2012, share two sons, and their divorce should be finalized around the time of the auction.

Just as we collaborate on the upbringing of our kids, it’s easy for us to work together on something like this.

There are a lot of unknowns about Crowe’s planned auction, but he is fully embracing his breakup. Crowe’s been Instagramming and tweeting about the auction, even responding to curious fans.

It’s unclear if the earnings will go toward Crowe’s divorce settlement or a charity. A request for comment from his rep wasn’t immediately returned.

The Australian news article is here.

 

Divorce and Cryptocurrency: A Bit of Bitcoin

Posted by Ron Kauffman on

Divorces are increasingly dealing with a new kind of asset: Cryptocurrencies. They are volatile and can be difficult to trace. What is a cryptocurrency, why are they so popular, and how are they a part of a property division in divorce?

Bitcoin is a type of cryptocurrency, and they are the latest way to potentially stash money so it can’t be found when it comes to dividing the marital estate.

Due to the supposed anonymity of Bitcoins, it seems practical and logical that people try to hide their cryptocurrencies from their spouses.

Cryptocurrencies are growing in ever larger value, and they are popping up more in divorces as a new class of asset to divide.

The law is familiar with the redistribution of many types of assets, like cash, bank accounts and other investments, but cryptocurrencies may be charting new ground.

Cryptocurrency

Cryptocurrencies are digital currencies not associated with a central government. Bitcoin, the biggest and most well-known, was developed back in 2009.

They are created and controlled by computer programs, or algorithms. Those algorithms lay out how transactions are made and recorded, and how new coins or tokens are found and released.

People and organizations known as “miners” keep records of every transaction, and attempt to solve complex computer problems that, when solved, reward them with new coins.

In effect, users record transactions directly between peers, rather than through banks or other intermediaries. That system is known as a blockchain and the transactions, and even the currencies, are sometimes referred to as “peer-to-peer.”

A major difference between a cryptocurrency and the U.S. Dollar is that, unlike the U.S. Dollar, the total amount that can ever be in circulation is limited. Because the total supply of the currency is restricted, you do not use more coins to pay for goods and services, but less.

Florida Property Division

I’ve written about 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 non-marital 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.

In Florida, if there is a justification for an unequal distribution, the court can do so, but must base the 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.

Additionally, courts can consider the intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition or within two years prior to the filing of the petition.

A major fight which can take place during mediation is whether a spouse is responsible for the 50 percent drop in value of a cryptocurrency.

Bitcoin Mania

One of the main problems with a cryptocurrency is their high volatility. It is hard to equitably distribute volatile assets which can gain or lose so much value so quickly.

The price of Bitcoin, for instance, the world’s biggest and best-known cryptocurrency, almost halved in value from its peak value in December.

Cryptocurrencies will be a significant feature in a large number of divorces. Although they can be traceable, cryptocurrencies are highly volatile, and they are not going to go away.

The Business Insider article is here.

 

Houses and Spouses

Posted by Ron Kauffman on

Once you’ve decided to divorce, new decisions need to be made: who is going to move out of the house, and are you going to sell the house – or not. Florida’s property division statute requires distributing the marital property, but is not exactly a how-to guide. This post looks at some options.

Deciding Whether to Sell

To make the decision more difficulty, there’s really no right or wrong answer to whether you should sell or keep a house. Your decision will depend on various factors.

Some of the factors influencing the decision to sell are things like your personality, is the house titled in both of your names, are there children, if so, where are the best schools, and how far away are the two parents’ homes.

Equitable Distribution

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.

Delaying the Sale

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.

Selling Now

If you can’t wait for years, and need to sell immediately, there’s a silver lining.

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.

Nesting

This is one of those modern ideas that sound so crazy, it just might work. With nesting, the kids live in the house, and the parents take turns living there. The parent not in the home often has an apartment that the divorced couple rent and share the cost of.

The U.S. News and World Report article is here.

 

Property Division: Avoiding Mistakes

Posted by Ron Kauffman on

As CNBC reports, divorce can take an emotional toll, but property division mistakes during the divorce can leave you in far worse shape than you intended. And the more intertwined you and your spouse’s finances are, the more closely you’ll need to pay attention while untangling them.

Ideally, you’ll have an attorney and a financial consultant who are advocating for the best property division, and who know what they are doing.

Nevertheless, experts say that even if you’d rather spend as little time as possible thinking about the divorce, it’s worth making sure you understand the implications of all property division decisions being made.

Most people don’t file during the summer, partly because the kids are out of school, they’re vacationing and they’re not focused on their relationship.

Then there’s a rise after Labor Day because people want to get things going before the holidays hit.

Florida Property Division

I’ve written about property division 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 Work divorce, the court must base the 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.

Additionally, courts can consider the contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.

However, courts generally can’t base unequal distribution on one spouse’s disproportionate financial contributions to the marriage unless there is a showing of some “extraordinary services over and above the normal marital duties.”

CNBC’s Divorce Mistakes List

According to CNBC, if you are among those pursuing divorce, here are some property division mistakes to avoid:

1. Keeping a home you can no longer afford.

While staying put means one less change in the midst of an already life-altering event, it often makes little financial sense.

2. Taking the house in lieu of liquid assets.

If you are offered the house in exchange for your ex getting comparably valued investments — i.e., a retirement, bank or brokerage account worth the same amount — think twice before agreeing.

On paper the two may be equal, but practically speaking the house may be far more costly to maintain.

3. Ignoring the Tax implications.

Not all financial accounts are taxed the same way.

For instance, if you get the 401(k) plan account worth $100,000 and your spouse gets the checking account worth the same, you just got the raw end of the deal. Taking cash from the checking account incurs no tax, while any withdrawals from the 401(k) would be taxed as regular income to you.

Most people forget to look at the complete cost of each asset, particularly the tax nature of each.

4. Not getting a court order to get your piece of the 401(k).

If your soon-to-be ex has a 401(k) plan, you must have what’s called a qualified domestic relations order, or QDRO, to access your share. (Individual retirement accounts do not require a QDRO).

This court order, which must get final approval from your retirement plan, marks one of the few times you can take money from a 401(k) without paying a 10 percent early withdrawal penalty. You will, however, pay income tax on the amount if you don’t roll it over to an individual retirement account within 60 days.

5. Not Getting life insurance

Depending on how heavily you rely on child support or alimony (aka spousal support), the death of your ex could leave you in a financial jam.

Life insurance on the person, with you as the owner and beneficiary of the policy, can serve as protection against that potential loss of income.

The CNBC article is here.

 

Divorce & Property Values

Posted by Ron Kauffman on

Hong Kong is one of the most expensive cities in the world. According to the Hong Kong Census and Statistics Department, divorce has steadily increased, and is nearly three times higher than in 1991. Is there a connection between real estate prices, divorce and property divisions?

As Bloomberg reports, the usual suspects for Hong Kong’s sky-high property prices are low interest rates, a housing shortage and demand from mainland China. But there’s another unforeseen factor: divorce.

Demand for separations and remarriages have accelerated sharply over the past two decades as the former British colony has deepened its integration with the mainland.

Between 1976 and 1995, cumulative total 84,788. In the subsequent years, through 2015, divorces shot up to 323,298.

Looser travel restrictions between Hong Kong and the mainland after Britain handed the colony back in 1997 have played a role in encouraging Hong Kong residents to find new partners across the border.

Florida Divorce and Real Estate

I’ve written on the role of divorce and real estate before. In many cases, declining house prices make it less likely that a homeowner will get divorced, but more likely that a renter’s marriage will end. Why?

Generally, courts 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.

Equity in the marital home is sometimes the most valuable asset. However, during periods of market downturns, the equity is a lot less, and home values can sometimes be upside down. When the equity is too low to distribute, or selling a house may mean a loss, people don’t want to sell, and have to stay married.

Researchers also think that the drop in divorce rates probably have something to do with the fact that a drop in the equity in your house traps unhappy couples in their house. However, renters can find two affordable apartments easier.

The Case of Hong Kong

Hong Kong’s housing planners didn’t anticipate the wave of break-ups. The cumulative gross number of new domestic housing units built between 1976 and 1995 reached 1,267,335. In the 19 years afterwards that number dropped to 857,378.

The divorce phenomenon is feeding into a market frenzy that the Hong Kong government has found increasingly tricky to manage. As mortgage lending booms and prices reach records, a mix of rising interest rates, frothy property valuations and the potential for a market collapse are frequently flagged as one of the biggest risks to the economy.

In cases of marriage break ups, both members of a former couple can end up on waiting lists for public housing, with private homes proving unattainable.

Households need 18 years of median income to buy a home, more than anywhere else in the world.

The Bloomberg article is here.