Tuesday, September 3, 2013
Woody Allen On Financial Planning
My wife and I went to see the new Woody Allen movie "Blue Jasmine" last weekend.
It is a terrific movie. Allen's story is compelling, and lead actress Cate Blanchett gives an Oscar-winning performance.
Blanchett plays a wealthy New York City socialite whose life has fallen apart. She moves to San Francisco to be with her sister after it turns out that her husband Hal (played by Alec Baldwin) has stolen millions from his clients, and the couple has lost everything. I think that Allen based his script loosely on swindler Bernie Madoff, but his story is much richer.
As Forbes columnist Deborah Jacobs wrote in a piece published last month, Blanchett's character made a number of financial planning mistakes that contributed to her downfall.
Here's an excerpt:
7. Don’t sign a joint tax return. That’s the advice one of Jasmine’s friends offers after overhearing Hal talk about a pending business deal. “Every time I hear them, I feel they’re one step ahead of the Justice Department,” the friend says. When Jasmine replies, “I’d sign anything,” the friend chimes in, “It’s called looking the other way.”
What the friend seems to understand, but Jasmine doesn’t, is that filing separately helps protect a spouse from being held liable for the tax evader’s taxes, interest and penalties. If they file jointly, she (assume it’s the wife) might get similar protections using what’s called the innocent spouse defense, but it’s harder to prove.
Still she’s not protected if, as the friend implies, she knew her husband was a crook, Gopman says. That’s a question that affects not just tax liability, but financial responsibility for a spouse’s wrongdoing. Moviegoers wonder whether Jasmine knew her husband was running a Ponzi scheme, just as we’ve debated whether Ruth Madoff was complicit in Bernie’s operation. While babysitting for her sister’s children, Jasmine confesses to no one in particular, “You’d have to be an idiot not to think his phenomenal success is too good to be true.”