This post first appeared on my personal blog at Share Your Number, but I thought it was worth repeating here …
MoneyNing acts surprised when he found out that “Steal-$50-Billion-From-Charity” Bernie Madoff’s wife gets to keep her house:
“Out of all the coverage of the Bernard Madoff fraud, the one headline that really puzzled me was the point in time when they were negotiating a house that the lawyers claim belonged to Madoff’s wife. It would seem to me that every asset the family owns came from the ponzi scheme, especially since the coupled was married for more than 50 years. However, the court ruled that Ruth (the wife) can keep the house when his husband destroyed so many people’s homes.
How is that fair?”
Well, it’s not fair … but, it’s the law and every person going into business SHOULD take advantage of the protection from liability (but, not criminal liability, as in Bernie’s case … I’m talking about commercial liability, when things simply go wrong in your business) that the law provides … in fact, the laws in Australia – as an example – make it very simple:
1. Put ALL of your personal (non-business) assets into your wife’s name … in the event of a divorce it makes NO difference how your assets are structured.
2. Put ALL of your business (non-personal) assets into a company name (e.g. equivalent of an LLC, S-, or C-corp) … that’s all that you can lose if your business/investments go broke
3. Sign as many personal guarantees as you need to (in YOUR name only) because you should have a ZERO net worth … no need to declare bankruptcy because nobody will bother you when they find out that there’s nothing to get and you then make a ‘generous’ offer to pay, say, 10 cents in the dollar.
[AJC: It’s true; I have a ZERO personal Net Worth … well HAD … I’ve recently broken my own rule because the house is now 50% in my name … not even sure why I did that?! ]
Scummy, but it works 😉
“in fact, the laws in Australia – as an example ”
Its relatively the same rules here. For clarification – the reason divorce doesn’t matter is because of Equitable Distribution.
@ My Journey – Thanks for the clarification … I wasn’t sure, because divorce in US is still ‘fault-based’ right? A nice quaint little old system 🙂
I stayed far far away from divorce law in law school, but each state is different. NY is fault based but Cali is not.
But in NY regardless of fault you are going to go through equitable distribution which is why your post is 100% correct!
@ My Journey – Phew! Thanks. 🙂