Thursday, November 24, 2011

Predicting Behaviour During a Divorce

Apparently Hulkamania is running 70% less wild these days.
Linda Bollea, 52, who divorced Hulk Hogan in 2009, received a little more than 70 percent of the couple's liquid assets in their divorce settlement, a recent court filing shows.
In addition, Hogan, 58, the semiretired professional wrestler whose real name is Terry Bollea, agreed to give his ex-wife 40 percent ownership in his various companies and pay her an additional $3 million "property settlement," according to the 
The Bolleas married in 1983 and divorced in July 2009 after nearly two years of acrimonious proceedings. 
This is what happens when you get divorced in California, a community property state. The 70% is an overstatement because it only applies to the liquid assets, and Linda gets $3 million from the sale of their property. But from reading through the rough description of the settlement numbers (it's hard to figure out the exact details from the article), it seems like she's probably getting maybe 50% of the total net worth.

I'm guessing that when Hogan got married in 1983, he wasn't imagining that in the event of a divorce, he'd be going through 2+ years of nasty court proceedings and still lose half his stuff. The latest dispute, apparently, is over whether he owes his ex-wife 40% of the company's gross revenues, or 40% of net revenues. Over such minor drafting ambiguities do years of litigation depend when people loathe each other.

The question is, why are people so bad at forecasting how their partners will act if they get divorced? I think part of the problem is that they keep being influenced by the way the partner is acting today. In other words, they think of how Bob or Sally is today, and imagine them breaking up.

But this is deeply faulty. By the time you get divorced, it's fair bet to assume that they will hate you more than any other person in the world. You have the burden of years of messy and hurtful deterioration of the reltationship, and/or surprising and nasty betrayals of trust. Plus you're then forced into a very high-stakes negotiation with someone that you now despise. Which may last years. And in which they'll have a lot of opportunities to engage in costly punishment - refusing to agree, dragging out court proceedings, etc.

So the better measure is the following - how do they act towards other people they hate or have hated in the past? Are they vindictive? Do they bear grudges for long periods? Do they find ways to get back at people? And how many such people are there - do they have a long list of people they don't like? If you have data on past relationships, this is even better. Are they on speaking terms with their past boyfriends/girlfriends/ex-wives/ex-husbands? Were they cheated on, and if so, how did they react?

A second, but somewhat less useful category, is how greedy are they with money generally? Someone may go after your money either as punishment for you, or because they really want the lifestyle it gives them. What is their attitude towards receiving charity? Are they reluctant to be financially supported by other people? I think this is a weaker test, because a) there's substantial punishment motivations for going after money as well, and b) by this point, they're likely to view it as being their money, not yours. And if there's any lingering aspect on this, having it intermediated through the courts will probably weaken it further.

But my strongest predictor would be the following - what's their attitude to the courts? Have they ever seriously threatened to sue someone? Have they gone through with it? Has this happened multiple times? If any of these start coming up, you'd better believe you're going to be in for a nasty divorce if it happens.

And once you've got your estimate of the chances of the divorce being messy, double it. Then either get yourself a good pre-nup with your spouse getting independent legal counsel that gets documented (knowing that courts will probably throw it out anyway), or don't get married. Unless you're in Australia, in which case even not getting married may not to save you. In which case, bend over and take it like the government demands, or presume to spend a ton on lawyers no matter what.

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