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April 1, 2009

Divorce now!

By Spear's

Spear’s, as is our optimistic nature and faith in human ingenuity, has seen the upside to the downturn: now could be the best time to get divorced.

All you hear is that a financial crisis is the worst time to get divorced: your assets are worth nothing, and if you sell the family home (that being a big ‘if’ given the availability of credit) you can’t buy much with half the proceeds.

Indeed, the news today from the High Court is that today is an even worse time to be divorced if you made the settlement when your balance sheet was, well, better balanced.

Brian Myerson, who is the former CEO of Principle Capital Holdings, was attempting to reduce retrospectively the settlement he came to with his ex-wife last year. Then worth £25.8 million, his fortune is distinctly less fortunate. He lost: his wife is entitled to the sum as was, not as is.

So according to these two trends, now is the worst time to divorce or to be recently divorced: either way, your assets are now worthless. But Spear’s, as is our optimistic nature and faith in human ingenuity, has seen the upside to the downturn: now could be the best time to get divorced.

Take it away, Katharine Landells, a family solicitor at Withers: “There’s never a good time to get divorced, but if you’re a husband with an entrepreneurial bent and you’re willing to take a bet on yourself, now’s a pretty good time to get divorced.”

The bet is that you can give away half your diminished fortune now but bounce back later on. It requires a long-term view, but is attractive: give away half of little now rather than half of a lot later. “Getting a divorce when you’re poor is better than getting one when you’re rich if you have got the expectation of earning more,” says Katharine.

Katharine is clear that it’s not her job to encourage divorces, but from a dispassionate financial point of view, she agrees that it might be time to start reaching for the decree nisi.

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