Credit Suisse chief executive pegged with bloated interest bill

In a high asset divorce, the financial stakes are enormous and a few words in a settlement agreement can have a large impact. Recently, news broke that a forgetful moment coupled with a few words in a settlement agreement will cost Credit Suisse’s chief executive more than $750,000.

Brady W. Dougan, of the Swiss financial services company, missed the deadline for a divorce settlement payment by 12 days in 2006. An appeals court has now ruled that he will have to pay a whopping $750,000 in interest for being 12 days late. How did a 12-day late payment result in $750,000 in interest?

As part of Dougan’s 2005 divorce, Dougan needed to pay his ex-wife, Tomoko Hamada Dougan, a total of about $15.3 in two installments. Although Dougan made the first payment on time, he was late on the second $7.5 million payment by 12 days. Their divorce settlement agreement called for interest on any late payments, but the Dougans did not agree on the length of time the interest accrued.

Dougan and his legal team argued that he should only have tallied 12 days worth of interest, which equals the length of time he was late on the payment. After reviewing the exact language of the divorce settlement, the court determined Dougan was responsible for interest accumulated from the date of the settlement, not the date the second payment was due.

Because of the court’s ruling, Dougan is on the hook for one year and 12 days worth of interest, which came out just over the $750,000 mark. The court did not go easy on Dougan, who has degrees from the University of Chicago, saying that both he and his team were financially savvy enough to have recognized the consequences of a late payment.

Source: DealBook, “Credit Suisse Chief Penalized $750,000 in Divorce Case,” Kevin Roose, 27 June 2011

The economy and timing affect financial goals in divorce

One of the primary steps in divorce negotiation is marital property division, and one of the main assets that typically needs to be divided is the marital home. If you have to sell your house during a divorce, the real estate market will determine whether you make or lose money by selling. During a down real estate market, like the one we’ve been seeing in Milwaukee, you could lose most of the equity you have built in the house. To avoid all of this, one party can keep the house and the other can take other assets in exchange for the value of the equity.

The state of the overall economy definitely has an effect on how a divorce can affect you financially. You may have to move, apply for more credit, or even get a new job as a result of a divorce. All of these things are easier to do in a good economy.

If a couple has children under the age of 18, child custody and child support can complicate financial matters. If custody of the children is split between both parents, each one will have to pay living costs for each household, instead of combining their incomes for one household. If one parent has custody, it may become more stressful for the other parent who has to pay child support.

Getting a divorce during bad economic times requires careful consideration and planning. Thankfully, people faced with divorce in Wisconsin do not need to go through the process alone. Experienced family law attorneys are available to help people protect their financial interests through the course of the divorce process.

Source: MSNBC, “The best and worst times (financially) to get divorced?,” Angie Mohr, Aug. 8, 2011

Keeping your small business intact when your marriage dissolves

When Milwaukee couples come to a mutual decision to divorce, they might also expect to be able to reach negotiations regarding child custody and property settlements with little interference from a third party. However, when complex issues and high assets are at the center of discussion, negotiations often become very complicated.

One small business owner discovered how complex the divorce process can be after he failed to take precautionary measures before marriage to protect his firm in the event of a divorce. As a result, it took more than a year before the man and his ex-wife were able to reach a divorce settlement, and the process nearly destroyed his business.

The business owner commented that his divorce was “painful” and “costly” for many reasons. In states such as Wisconsin, a small business may be considered marital property. If this is the case, business owners risk dissolving the business by splitting the interest with a spouse, or one spouse could buy the other out. The business owner commented that so much time was spent on retaining his business in the divorce that he lost focus on his consulting firm.

In fact, he believes that his consulting firm lost more than $200,000 in potential business. Fortunately, the man was able to retain his business in the divorce and he eventually turned the company around. However, many attorneys who deal with high asset divorce cases commented that without taking certain measures to protect one’s business in the event of a failed marriage, individuals could see their businesses go under as well.

In order to prevent one from losing his or her small business because of divorce, individuals have several legal options that they can explore. Before marriage, business owners may want to consider preparing a prenuptial agreement to detail what should be considered marital assets or what each spouse agrees to be entitled to if they ever divorce.

Another option is to prepare a buy/sell agreement which helps owners create a plan regarding what should happen to their business and how ownership should be determined in the event of certain triggering circumstances such as a divorce.

Although Milwaukee couples may understand that their marriages cannot be saved, they can take precautionary measures to ensure that they don’t risk losing their business as well.

Source: Reuters, “Divorce has “immense” impact on small businesses,” Deborah L. Cohen, Sept. 28, 2011

Danica Patrick announces divorce on Facebook

Celebrity NASCAR driver Danica Patrick recently announced on Facebook that she was divorcing her husband of seven years. While she said in her announcement that the split was amicable, Patrick — the most successful woman in American racing history — could still potentially face many of the challenges typical of a high asset divorce.

One issue frequently arising in high asset divorces is whether one spouse should be awarded spousal maintenance — generally known as alimony — from the other. Spousal support is designed to provide a non-working or under-employed spouse with assistance until that person becomes self-supporting. It often is a hotly contested issue in divorces, especially if one spouse earns a significant income. In Wisconsin, there are no set black and white rules to determine if, when, or how much spousal maintenance will be awarded. Courts will examine a number of factors when coming to a decision.

Another issue in high asset divorces is property division. In Wisconsin, the marital estate includes property that either spouse acquires during the marriage, with exceptions for gifts and inheritances. In most cases, the court divides the marital estate equally between the parties. In a high asset divorce, it is important to get comprehensive valuations of all marital property to ensure equitable division.

Patrick likely has a team of legal advisers who will help her work through these issues. Many people going through divorce might benefit from an experienced divorce attorney who can assist with these complicated legal issues.

Source: Associated Press, “Danica Patrick divorcing husband after 7 years,” Jenna Fryer, Nov. 20, 2012