With Bernie Madoff forced into bankruptcy what will Ruth do to get her “alimony”

Now that the judge has ordered that Bernie’s investors/creditors can force him into bankruptcy, it looks like Ruth’s options have gotten more streamlined. She definitely will have to get in line behind creditors, not only with respect to business assets, but also personal assets as well. I mean, she would be entitled to some “exemptions.” Even in bankruptcy a person does not necessarily lose all they have. They get to keep certain personal items, with a value cap, of course; and there may even be a homestead exemption–meaning that their home is exempt from creditors usually (but still they may have issues with foreclosure by the note/mortgage holder). The last I think I heard, though, is that Ruth’s house in Florida, which was supposed to be subject to a homestead exemption, was actually seized, along with her husband’s boats and other possessions by the feds last month. And she was down in Palm Beach with friends but staying in a hotel….

Can Ruth really come out of this with absolutely nothing? She could. But I think the Feds will settle with her, give her something to tide her over. But most of it, the jewelry, the homes, everything of real value will be forfeited, no doubt about it. So what of all this talk about divorce? Will she divorce him? Will that help? I’m still thinking that she ought to try a constructive trust/innocent spouse argument. Again, that would be a tough hill to climb and because it is a novel concept, it would take a highly skilled, creative lawyer to pull off. But I think it could work. I think she would get more that way than if she just left herself “victim” to this forced bankruptcy…

What if Bernie died before the bankruptcy took effect? That might make things even more interesting. Because now we are looking at Estates and Trusts law. If he didn’t have a will, then we are looking at the laws of intestacy. If he did have a will, we are looking at certain marital estate trust issues, Q-TIP trusts and a whole bunch of other issues that might complicate things for the CREDITORS/INVESTORS. Because, if I remember correctly, there are certain types of estate trusts that are beyond the reach of creditors.

But I doubt Bernie will croak anytime soon. The man has nerves of steel. Cowardice is not a word I would use to describe him. He is going to live. That means that as far as Ruth’s “alimony” she’s looking, at best, at….I am not even sure what she’s looking at at this point. I would say she has to begin to throw herself at the mercy of the Feds. This thing just isn’t looking too good.

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