A Postcard from the Ever-Fascinating World of Divorce: “The $500K Cat”

Published on: April 28, 2013

Filled Under: Blog, Financial Essentials, The Frazer Rice "Real World"

Views: 1175

Few would doubt that divorce is a difficult and emotional process.  It usually starts with the discovery of vanilla scents and sparkles on the linens or an excessive pool maintenance charge – or both. But divorce proceedings themselves are the signal that an end is near for one of life’s most significant relationships. It forces people to put numbers around a situation that is under severe stress. Here, the stakes are especially high because divorce is the biggest “destroyer” of wealth besides taxes. Divorce also mixes two things that are horrible about America: lawyers and committees. The fastest way to get fat, then unnaturally skinny and ultimately grey is to get divorced.  So, if it happens to you, the best policies are to plan ahead and try to get through it as quickly as possible.

If you’re lucky, this process can be fast and amicable. Or you can be George Clooney and avoid the institution of marriage completely. Then again, for those with a “luck deficit,” THIS really can happen to you . . .

Once upon a time, a hedge fund trader (and close personal friend) married a lovely woman that wrote books.  They had a nice life and lived in Manhattan. They lived well. There were no kids involved.  Somewhere along the way, however, the bridge came tumbling down and divorce was indeed the only way out.

Both sides were smart and stubborn. Divorce law being what it is (and New York being what it is) neither wanted to be part of a gunfight while holding a knife. So these two went to into pitched battle using the scariest weapons known to human-kind: divorce lawyers. Consequently, two of the biggest baddest (and loudest) divorce attorneys faced off. They (and the couple) fought over everything – the apartment, the china, the cash. The value of my friend’s hedge fund interest was tough to pin down, so they fought about that. For him to sell part of it and raise the money to fund the settlement was also going to create a massive tax hit, so they fought about how to value that too.  Both sides demanded tax returns and both sides had dueling accountants and experts. They both accused each other of having offshore accounts.  They hired private investigators; they tapped phones.  She cried constantly. He went crazy. This went on for over a year with the divorce lawyers charging by the hour as the melee unfolded. Hearing about this situation, you could not help but visualize one of those national debt clocks running a balance toward infinity.

Amazingly, the biggest bone of contention in the division of assets came down to a cat. I never met the cat. I’m told it was cute, not particularly friendly, and shed a lot.  It used to know when the husband was supposed to wake up in the morning and then bother him ten minutes beforehand – always the hallmark of sadistic beast in my eyes.

By all accounts, the wife loved the cat. She nursed it from kitten-hood, played it Mozart and even tried to teach it to read.  She loved it so much that it became the one final stumbling block in the divorce settlement.  Her divorce attorney convinced her that the cat was costing her money in the negotiations.  His side made the argument that custody of the cat had monetary value and that it should be netted against the rest of the assets. She decided that she was being short-changed in the valuation of the hedge fund interest because having custody of the cat was somehow skewing the calculations.  From the outside, watching this irrational display was like listening two old guys arguing whether the Lucille Ball or George Burns was funnier – Irrelevant, somewhat sad, but, on the whole, a least perversely amusing.

My friend knew where he stood. He didn’t like the cat. He didn’t want the cat. And he certainly didn’t want to pay for the wife to have custody of the cat that she wanted.  But she wouldn’t sign the divorce agreement until he paid her more money to compensate her for taking care of the cat that she wanted to take care of herself. By paying more, he was receiving insult along with injury because the tax hit was vast and looming.  His blood pressure went to Mars. His drinking went to Venus. On weekends, he went to Montreal.

The negotiation started. She wouldn’t sign the divorce agreement until he paid more money.  Against this backdrop, this is essentially how it went:

Him:  “Look, I know you like the cat. I have explained over and over that the cat has nothing to do with how a hedge fund is valued. What is the disconnect here?”

Her:  “I don’t believe you.  My lawyer thinks this is a ruse so that you can have the cat and cheat me out of what I’m entitled to have.”

Him: “But I don’t WANT the CAT!  It’s YOUR cat!  The hedge fund thing is a separate issue!  It has been a separate issue for nearly a year now!”

Her:  “Are you saying you never loved her?” [TEARS]

Him: “Never lov . . . what?!”

Her: “If you never loved the cat, then I should have it . . .”

Him: “Wha? . . .”

Her:  [Tears]

Him:  “Take the Cat! . . . Why are you crying?”

Her:  [Tears subsiding] “I can’t sign this agreement until the numbers reflect OUR cat.”

Him:  “Omigod!  This has been going on for months!  Do you realize why we are getting a divorce!?  It’s because of this!  [Sam Kinison scream] . . . OK . . . I’m going to say this slowly.  Ready?  . . . The . . . cat . . . is . . . not  . . . part . . . of . . . the . . . hedge fund!!”

Her:  “You know I can’t talk to you when you are like this.  [Sobs] I need some space . . . !”

Him:  “Space?!  I . . . What is this going to take?  Please, for the love of God, take the cat! . . . I don’t even want the cat!”

Fast forward FOUR months later.  The divorce agreement was ready to go. Both sides signed it, assets were re-titled and one especially painful check changed hands.  It was for $500K from Him to Her. The memo line read simply: “For One Motherfucking Cat.”

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