The Minnesota Court of Appeals recently held that a hedge fund CEO who owed approximately $141 million to his ex-spouse must pay 10 percent interest on that amount. During his Minnesota divorce, Andrew Redleaf agreed to pay his ex-wife $140.7 million over five years in return for his wife's agreement to waive any interest she would have had in the hedge fund.
Redleaf agreed to pay $20.8 million before the divorce, $30 million in 2013 and monthly installments of $1.5 million. Unfortunately, according to court papers, Redleaf's income dropped and he missed more than one year of payments. The district court refused to let him change the terms of the divorce settlement when he argued that there had been a change in circumstances.
Redleaf asked for the court to set the interest rate on his arrears at four percent, but the court set it at 10 percent, which is required, by Minnesota law, for all judgments over $50,000. He brought an appeal to the Minnesota Court of Appeals, who affirmed the district court judgment without commenting on Redleaf's ability to pay.
Financial Judgments During Divorce
Few divorces involve assets worth millions of dollars. However, this case highlights the importance of coming to a reasonable divorce settlement. Both spouses can benefit from evaluating the potential long-term effects of a settlement on them and their families.
In divorces involving significant assets, it is also vital for each spouse to hire a divorce attorney to represent their interests and protect their financial future. An agreement to pay a lump sum is one option of many to be considered during your divorce. There are also other large assets at play, such as your home, any vacation homes, motor vehicles, and, as in Redleaf's case, businesses.
Source: Pioneer Press, "First, It Was a $141M Divorce. Then, It Got Pricey," John Welbes, Dec. 13, 2011.