All is Not What it Seems: Wealth and Divorce

You may be surprised to learn that many of your seemingly wealthy neighbours are not wealthy at all. They are simply part of a burgeoning group of North American families who live beyond their means. They may have all the outward signs of success: expensive cars, designer wardrobes, extravagant vacations, and upscale homes, but the reality is they owe money to everyone and live in a state of perpetual angst.

When they face an unexpected event, such as the loss of employment, the collapse of a business, a devastating illness, or a divorce their house of cards collapses. What I have seen in almost three decades of working with families in crisis is how often spouses are unaware of mounting debt and overspending, until it is too late. Most frequently the debt is consumer credit loans and unpaid personal and corporate income taxes, together with punishing interest payments and in respect of taxes, penalties and fines owed.

It can be a terrible shock to live in a splashy area of town in a million dollar home only to realize that your husband or wife has remortgaged the property multiple times to support a heavily leveraged lifestyle, and the boat, ATV’s and snowmobiles are owned by the bank!

A recent case in Britain is emblematic of court hearings across the country where apparently prosperous husbands and wives split up, agree to sell assets, pay debt, and share the proceeds, but the sinking economy negates all the good intentions.

A businessman in London made a fortune in the mining industry and was obliged to pay his wife $2 million dollars. He immediately paid her $1.375 million in 1999 and the balance was to be paid over time. But he never did pay her the remaining amount. After several futile court appearances, she asked the judge to order her ex-husband to pay what he owed together with interest for the past 17 years or be sent to prison. The man lived in an expensive rented apartment but insisted he was penniless, deeply in debt, and was relying on housing benefits for the poor, and the charity of his friends and his synagogue.

His ex-wife, of course, argued that her ex-spouse’s alleged circumstances were an elaborate façade meant to deprive her of her rightful entitlement and that he should pay or be sent to jail. The judge sympathized with her, particularly acknowledging that without the funds she may lose her home, but pointed out that there was no evidence that he had any hidden assets or secret funds. The Court declined to order a jail sentence finding that he had no current ability to pay her.

How can a spouse protect herself from a scenario like the one above? Clearly, it would have been best if this lady had received all she was entitled to upfront, but often that is not possible. If the remaining monies had been secured by an asset retained by the former husband that would also have assisted, but again circumstances do not always permit that and judges in British Columbia have been reluctant to encumber a spouse’s share of the property to protect the other spouse. A life insurance policy on the husband only helps if he dies, while still owing monies.

Most frequently this problem of collecting monies after the divorce arises in cases where a spouse has a long-term obligation to pay spousal support. Many spouses fail to realize that if they agree or are ordered to pay support, it will be most difficult to escape the obligation and unfortunately, there are spouses who create situations where they appear to be impecunious. Lump-sum support is one solution but again, judges are loath to order a spouse to give up their capital to pay spousal support.

The lesson to be learned is that spouses must insist on being aware of how family finances are handled during the marriage and that upon divorce a “bird in the hand may be worth two in the bush.”

Lawdiva aka Georgialee Lang


Transgendered Widow Sues for Life Insurance Proceeds

GEO#1It’s over ninety degrees in Texas but it’s going to get a lot hotter. A court battle is heating up over the estate of Thomas Araguz in Wharton, Texas. Araguz, age 30, was a fire captain in the Wharton Fire Department before he lost his life in a blaze on a local chicken farm on July 4, 2010.

Araguz’s life insurance policy of $500,000 should be distributed to his wife of two years, Nikki, and his two children from a previous marriage, however, Araguz’s parents and ex-wife are asking a court to block the distribution and anul Mr. Araguz’s marriage to Nikki Araguz, because she was born male and had sexual reassignment surgery. If that occurs, the children will receive the entire life insurance policy proceeds, presumably to be managed by the children’s sole custodial parent, Araguz’s ex-wife.

The family is relying on a case decided in Texas in 1999 where the court held that same-sex partners cannot marry and the State of Texas does not recognize gender reassignment.

Nikki was born Justin Perdue in 1975 and claims that her husband knew about her gender reassignment and supported her during reconstructive surgery. The problem is that earlier on, Mr Araguz’ ex-wife was challenging Mr. Araguz for custody of their two children and to present the best case in court, both Thomas and Nikki Araguz swore under oath that Mr. Araguz knew nothing about her previous life as a man.

Now Nikki says that they both lied to the court in order to receive a more favourable result in the custody action. Public opinion in Texas is mixed but most people believe the money should go to Nikki. I believe a fair result is the division of the proceeds equally between the two children and Mr. Araguz’ widow.


In 2011 the Texas Court ruled in favour of the Araguz family and against Nikki Araguz. However, in April 2014 the appeal court reversed the decision and ordered a new trial with a stipulation that Ms. Araguz cannot be prejudiced by her change in gender.

Lawdiva aka Georgialee Lang

Toddler’s Death During Access Leads to Lawsuit Against Psychologist

GEO#1Prince McLeod Rams was 15 months old and on his fourth unsupervised access visit with his father, Joaquin Rams. It would be the last day of Prince’s short life, as during the three-hour visit, he drowned in his father’s bathtub.

Hospital staff became immediately suspicious when they noticed a bruise on Princes’ forehead and dried blood in his nostrils. They contacted child protective services.

It would later be discovered that Prince’s father had purchased over a half a million dollars in life insurance on his son’s life, and that he was under investigation for the murder of his former girlfriend, Shawna Mason, who was shot to death in 2003.

Prince’s mother, Hera McLeod, who had sole custody of her son, had implored the Court to grant only supervised access to Mr. Rams. However, the Court determined that allegations that he ran an on-line pornography site, was a suspect in the death of his former girlfriend, and was also accused of raping a 19-year-old girl were unproven and speculative. Judge Michael Algeo called the allegations “smoke that’s been blowing that I can see through”.

Since being charged with Prince’s murder, the investigation into the death of Rams’ former girlfriend has gained traction and officials are also looking into the circumstances of his mother’s 2008 suicide, a death that some members of the Rams family believe was murder, not suicide. Mr. Rams received his mother’s life insurance, a benefit that rescued him from his dire financial circumstances.

Recently, Prince’s mother filed a lawsuit against psychologist Margaret Wong, who prepared a custody and access report that recommended Mr. Rams be allowed unsupervised access to Prince, expert evidence that was instrumental in the Court’s access decision.

While Ms. McLeod acknowledged that her son’s father was highly manipulative during their 18-month relationship, she suggested that a skilled psychologist, like Margaret Wong, should have detected his true character and focused on her son’s best interests, not her ex’s needs and desires.

Ms. McLeod tells the tragic story on her blog “cappucinoqueen”, while Mr. Rams writes his counterpoint at “KingLatte”. He insists he his innocent and that his son died of a seizure, however, the county medical examiner’s findings negate Mr. Rams’ allegations.

Hopefully, the truth will emerge at Mr. Rams’ trial later this year.

Lawdiva aka Georgialee Lang

Secret Divorce Shocks Widow

After 30 years of marriage Vivian Pitts Dowers, age 75, was having a hard time coping with the death of her husband, David Dowers, age 65, a man she had loved for years during their childless marriage. When she finally got around to going through his things she was shocked to discover divorce documents which showed that her husband had divorced her, eight years earlier!

The divorce order from the Manhattan Supreme Court was granted to Mr. Dowers based on his allegation that she had abandoned him due to financial difficulties. He also lied to the court by providing the Judge with a fake address for Ms. Dowers and swore he had served her with the divorce documents at her new residence. The truth was that they had lived together all along in their New York apartment, never having even separated.

Mr. Dowers fraud was devastating to her as it meant that she could not receive any inheritance or benefits from his death.

His survivng heirs, his children from an earlier relationship, were not at all sympathetic, as they fought to deny their step-mother her rightful entitlements and deprive her of a $44,000 life insurance payout and monthly pension income from his long tenure as a janitor at Columbia University.

Happily for Ms. Dowers a New York legal aid lawyer persuaded a judge that her husband’s tale of abandonment was false, the divorce order was nullified, and she got her money. So sorry for his kids…

Lawdiva aka Georgialee Lang

5 Support Arguments That Don’t Matter in Divorce Court

Divorce sucks. Especially when your lawyer tells you that you are likely going to come out with the short end of the stick. Even legal sophisticates, meaning those who have experience with courts and lawyers because of their business affairs, their real estate acquisitions or their estate planning, often gasp at the perceived immorality of divorce laws.

Clients frequently complain about the unfairness of divorce laws and the courts’ reluctance to consider moral issues that are important to litigants, but irrelevant to the court.

Five of the most common complaints are:


In bygone years the courts only made spousal support orders where a recipient spouse was innocent of marital fault. When a wife was considered to be the cause of the marriage breakdown, no support was payable.

In the middle of the 20th century, divorce law began to evolve and currently many countries and states administer “no-fault” divorce. That means even if your husband or wife is a serial philanderer, or physically abusive, if they qualify for spousal support, they will likely get it. A long marriage results in a lengthy period of support and support theory is based on a lack of means of one spouse and the ability to pay of the other.

Imagine the dismay of a spouse with means when their husband or wife leave them for another partner, move in with that partner, and still receive support from their aggrieved left-behind spouse. The obvious question is “Why do I have to support her (or him) when she has chosen to move on with a new partner? Shouldn’t she be supported by him?”

Sounds logical, however, the legal test for entitlement to support is based on “means and need”. If the spouse moves in with a starving artist or someone on a disability pension, that spouse may still have need, despite their attachment to a new partner. Related to this complaint is the next one:


Often long-divorced clients will call their family law attorneys bursting with good news. He or she will announce that after 15 years their ex has finally remarried and when can the spousal support payments end? The problem is that only if a former spouse agrees to the cessation of support, in writing of course, can payments be terminated.

Ex-spouses, however, are loath to give up what they have enjoyed for many years and most frequently the matter ends up in a courtroom. Twenty-five thousand dollars later and with a little luck, the support may be reduced, but not eliminated, because of the “means and needs” test.


In long marriages, spousal support is often ordered to be paid permanently or indefinitely. Some jurisdictions even order that support be secured by life insurance or binding on the estate of the payor upon his or her death.

What that means is that even after a paying spouse dies, the support lives on, paid from a life insurance policy or from the proceeds of the deceased payor’s estate. The practical reality is that as spouses enter their “golden years” they generally live off their pensions or the proceeds of sale of their assets. Yes, the same pensions and assets that were already divided between the spouses at the time of divorce.

The alleged unfairness is that the deceased spouse’s estate is reduced by the ongoing support obligation, to the detriment of the deceased spouse’s heirs, and worst of all, it is paid from assets that were already divided equally. It’s back to “means and need” again. If the recipient spouse has need and the payor spouse has means, support may continue after death.


Clients often ask why they are obliged to pay support for their children after the age of majority, and in particular, why they are ordered to fund an expensive university education? The argument usually centres around the fact that if the family was intact, decisions would be made that may include parental funding of school, but could also include children working part-time or applying for student loans.

The answer is simple. If divorced parents cannot agree on how to educate their adult children, then the court must step in. The laws in many countries provide that child support must be paid until the child obtains one post-secondary degree or diploma. Yes, even if the family, pre-marriage breakdown, had no intention to fund their children’s schooling.


In many jurisdictions child support is governed by child support guidelines enacted by legislators. Many of these laws provide that a parent with primary residence of the children is entitled to child support based on the other parent’s annual income. So far, so good. However, issues arise when the recipient parent’s earnings outstrip the payor parent’s earnings and yet the higher-earning parent is not obliged to make a financial contribution to support, so as to reduce the support obligation of the lower-earning parent.

The policy behind the law is that a primary resident parent’s contribution is more than equal to monies paid for child support, for it is the primary parent who does the most work including transportation, socialization, schooling, medical and dental issues, psychological and emotional guidance and many other day-to-day matters for the care of children.

The common denominator in these scenarios is that if you and your spouse cannot come to an agreement on support, the court will intervene. Best to try to reach a compromise with your spouse then to risk the rigours of the law.

Lawdiva aka Georgialee Lang