Here’s an upside for women when it comes to divorce: Once your divorce settlement agreement is finalized and you have divided your assets, you are no longer subject to your ex-husband’s bad financial decisions. You’ll have to learn how to handle your own money, but at least those choices will be yours.
By way of example, let’s look at one victim of the ever-confounding fraud perpetrated by Bernie Madoff.
Steven Simkin is a partner at one of the country’s most prominent and powerful law firms. When he and his wife, Laura Blank, divorced in 2006, the couple split a fortune in excess of $13 million. Almost half of that fortune, a cool $5.4 million, was invested with Bernard Madoff. After the divorce, Simkin continued to keep a sizeable amount of money in Madoff investments. But Blank didn’t. Instead, she opted to receive her divorce settlement proceeds in cash (some $6.25 million) and real estate.
Fast-forward to 2008 when the Madoff Ponzi scheme was exposed, and you’ll realize Simkin’s predicament. He lost millions because of the Madoff fraud, and he felt his divorce settlement should be revised. Essentially, he wanted Blank to compensate him for the losses he sustained.
Now wait just one minute! Surely, Simkin, an esteemed attorney, knows what I have been telling my clients for years:
There are no do-overs in divorce.
Every divorce settlement involves the valuation of assets --and the divorce of Steven Simkin and Laura Blank is no different. Terms were set. Compromises were made. Divisions were agreed to.
In any divorce, there’s an implicit understanding that the value of these assets may change over time, but once a couple separates, their financial futures are unlinked. If Simkin had invested in Apple instead of with Bernie Madoff, Blank would be no more deserving of his profits than she is of his losses.
Still, Simkin tried to change the rules of the game. When Launa Blank rejected his bid to renegotiate assets, her ex-husband took her to court in what The New York Times described as “one of the most unusual lawsuits resulting from the Madoff fraud — and one that riveted the matrimonial bar.”
Initially, a trial judge dismissed Simkin’s suit, but shortly thereafter a New York appellate court ruled it could go forward. Just recently, the New York Court of Appeals rejected Simkin’s argument once and for all.
“This situation, however sympathetic, is more akin to a martial asset that unexpectedly loses value after dissolution of a marriage. The asset had value at the time of the settlement but the purported value did not remain consistent,” wrote Judge Victoria A. Graffeo, according to Bloomberg Businessweek.
I couldn’t agree more. As divorce attorney Caroline Krauss-Browne, partner at Blank Rome, points out, there is an overriding public policy which supports finality both in negotiated settlements (preferred by courts) and, if the parties are unable to agree, decisions after trial.