Monday, July 14, 2003
In tough times, splitting couples fight for pennies
By Peg Tyre
July 21 issue — Christie and Loren Kersten are divorcing, but after 12 months of brutal wrangling and more than $5,000 in legal fees, they still can’t agree on how to divide their assets. Not that they have much.
THE HOUSE WHERE THEY LIVED in Arlington, Texas, was hers before they married. The bank took their vacation property in Paradise, Texas. That leaves Loren’s 401(k), which swelled to $80,000 during the boom but has now withered to $40,000. Christie says she’s entitled to half. But Loren, an engineer who works for Lockheed Martin, just got rehired after a harrowing nine months of unemployment. To him, that 401(k) isn’t just a retirement fund. It’s a life raft. “I’m not sharing it,” he says. “It’s the only thing I’ve got to fall back on.”
Lawyers say the War of the Kerstens isn’t all that unusual these days. Around the country, the downturn in the economy has injected an extra dose of venom into the already poisonous process of divorce. Although the actual rate of married couples who have gotten divorced has been nearly flat for the past two years—declining from 4 percent in 2000 to 3.9 percent in 2002—lawyers say lean times are fueling the acrimony associated with untying the knot. In a poll taken by the American Academy of Matrimonial Lawyers last November, 173 of the 373 respondents said the tough economy was making divorce proceedings more contentious than before, while only 38 saw contentiousness decline.
MONEY CAN’T BUY EVERYTHING Of course, the ugly divorce, particularly among celebrities, has never gone away. The very public explosion of the Cuomo-Kennedy union—complete with mudslinging over indiscretion, infidelity and betrayal—is a reassuring reminder that money can’t buy everything. But back in the roaring ’90s it often looked like it could, as free-flowing cash greased the exit ramp of many marriages. Newly minted millionaires could write a check, says divorce lawyer Raoul Felder, “and move on to the next wife.” Today those former high fliers are haggling over tenths of a percentage point and now worthless stock options. Many of the most contentious couples don’t just want to be single again, says Beverly Hills divorce lawyer Annie Wishingrad. They want the Dow to be trading at 10,000, too. “People still have unreasonable expectations.”
Even couples who have been divorced for years find themselves back at the negotiating table. Salaries for people in the tech and financial-services industries have plummeted, and many want to readjust their alimony payments to reflect the downturn.
But bitter members of the First Wives Club say too often those former mates are crying poor to keep from meeting their obligations. Ginita Wall, a forensic accountant in San Diego, specializes in tracking down marital assets, usually on behalf of a soon-to-be-single wife. She’s found that some men have been legitimately hurt by the economy. But others, she says, are using tough times as a convenient cover while they squirrel away assets in order to avoid splitting them with their departing partner. Sometimes, though, it’s the wives who are unwilling to face a shrinking bottom line. Wall has had clients who think the prolonged bear market is a conspiracy cooked up between their ex-husbands and their divorce lawyers. “The difficult economy,” Wall says, “has bred distrust on both sides.”
CHILD SUPPORT AND THE ECONOMY The lagging economy is also putting pressure on the most vulnerable parties in a divorce—children. Courts in many states now direct employers to withhold money from a parent’s weekly paycheck. As a result, the percentage of parents who pay child support has risen steadily for the last few years. But calls from custodial parents who need the court’s help to get their exes to pay child support have increased 30 percent in the past six months, says the Association for Children for the Enforcement of Support, a national nonprofit group. John Kelly of Streamwood, Ill., says he’ll be happy to pay his court-ordered child support—but first he has to start working again. Kelly, a former IT project manager, saw his child-support payments rise in lock step with his salary after his divorce in 1999. Then, two years ago, Kelly was laid off from Sprint, and “my take-home pay got reduced from $110,000 a year to unemployment, which is $400 a week.” Now he’s petitioning the court to reduce his child support from $1,700 a month to $400. “The last thing I want to do is hurt my kids,” says Kelly. “But the job market is very difficult.” His ex-wife, Anne Baxter, isn’t buying his hard-luck story. “He hasn’t had a personal interview since last August,” she snaps. “There’s no reason he can’t work.” But Kelly says he’s applied for more than 150 positions and is trying.
For a few couples the downturn in the economy has created an opportunity to forge a truce. When New Jersey couple Anton and Linda Mast divorced in 2001, Anton, an interest-rate broker, was making more than $200,000 a year and agreed to pay a hefty alimony and split custody of their two kids. Later that year the economy took a nose dive, and Anton’s salary followed. He asked the court to reduce his payments. Linda, whose salary had increased since they split, says she agreed. Last November, Anton’s salary shrank even further—to $80,000. “I laid it on the line and described to her the exact details of my situation,” he says. Since they were already splitting expenses for the children 50-50, his ex-wife agreed to forgo alimony and focus their resources on the children. Last month they filed their new agreement with the court. “We had to look at the bigger picture—the happiness and well-being of our kids,” says Anton.
The Masts figured out what many exes are learning the hard way: marriage is always for richer and poorer, and sometimes, so is divorce.