‘Postnups’ Boom Due To Hedge Fund, Private Equity Divorces


“Spring being a tough act to follow…God created June”

It is bright and beautiful in Paris this morning. A romantic day. After a week of cold rain, the sun is out…the flowers are in bloom…and lovers walk arm in arm along the Seine.

A very unromantic note comes to us today in the Financial Times. The hard-hearted scribblers at the salmon-colored paper tell us that “Post-nups” are becoming very popular in the financial industry.

What are “Post-nups”? Well, dear reader, you’ve heard of pre-nups? Couples who are deeply in love…who stand before God and all their friends and relatives, solemnly promising to love and cherish each other through thick and thin, for better or for worse, for richer or for poorer…’til death do them part…nevertheless, often have their fingers crossed. Before even stepping up to the altar, these lovers take the stars out of their eyes long enough to read a long document prepared by their lawyers, in which they agree in advance how they will split up property in the event that everything doesn’t go exactly as planned.

Our sharp-eyed Dear Readers will spot the contradiction immediately. You can’t logically sign one contract – in good faith – with no ‘out clause,’ and simultaneously sign another contract specifically hinting that you really didn’t mean it when you signed the first. If the signatory parties had been sincere about the first, they wouldn’t need the second.

Logically, lawyers should argue that if you were in bad faith as to the first…you were in bad faith as to the second, too. Consequently, neither should hold up in court. By extension, all pre-nuptial agreements might be considered invalid. And all marriages too.

Well, now the lawyers have found another way to separate rich clients from their money – by getting them to sign up for Post-Nup agreements. These after-the-wedding agreements are becoming popular, says the FT, because there is so much money at stake in financial industry households.

“The massive infusion of cash into the so-called hedge fund communities in New York, Connecticut and California has proved to be fatal to many marriages – and a windfall for lawyers, psychiatrists and forensic accountants who specialise in the super rich.

“There is no question that a huge infusion of wealth to relatively young people has a disastrous effect on the marriage’s stability,” says Bern Clare, a Manhattan divorce lawyer.

“Hedge fund and private equity divorces are often far more bitter than those involving film stars, according to Scott Weston, a Los Angeles matrimonial lawyer.”

We don’t know if that is true or not. But we can believe it. Money makes the world go round. Many people keep score in life simply by looking at their financial statements. They are, of course, the people Oscar Wilde must have had in mind when he described those who “know the price of everything and the value of nothing.”

Not only do people in the financial industry have a lot of money…money means a lot to them. So, they fight over it. And the lawyers get rich. The FT cited a recent case where the dependent spouse, a wife, insisted she needed US$800,000 a month in child support payments, even though she already had an income of US$7 million a year.

To you and to us, dear reader, these amounts seem unbelievable. Seven million dollars per year…plus US$800,000 a month in child support! Why do people think they need so much money to live happily? We have very simple tastes. We could easily get by on half that much.

Bill Bonner
The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Bill Bonner

Latest posts by Bill Bonner (see all)


Leave a Reply

Be the First to Comment!

Notify of

Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to letters@dailyreckoning.com.au