Tag: Equitable Distribution

Dr. Dre, Divorce, and Dissipation

Rapper, Dr. Dre, and his wife Nicole Young’s divorce is in the news again as she is alleging dissipation in court documents, that Dre “secretly” transferred “valuable trademarks” they jointly owned — both the name “Dr. Dre” as well as his hit album The Chronic— after allegedly kicking her out of their home in April.

Dissipation

What’s the Difference?

Some couples divorce amicably, recognizing that a divorce is best concluded when they come to a quick and fair resolution as soon as possible so they can get on with their lives.

For other couples, divorcing is a lot more difficult. In high conflict cases, greed, anger, and spite are overwhelming, and the process can quickly spiral into all-out war fought over every dollar.

A common dirty trick in divorce is to “dissipate,” or waste, marital assets. When a person tries to dissipate assets, it means they are intentionally squandering marital property to prevent his wife from getting her fair share of it in the divorce settlement.

In the lawsuit, Young alleges that shortly after being “forced to leave their family home,” Dre, 55, registered a new holding company and then began transferring “highly valuable trademarks,” misrepresenting himself as the sole owner.

“Andre’s plan all along was to deny Nicole’s ownership rights,” the lawsuit alleges, claiming that the transfers were made before Dre threatened to file for divorce on June 27. Young went on to initiate proceedings two days later, on June 29.

Although Young claims she has “demanded return of the trademarks,” Dre has “failed and refused to do so. It is inequitable and unjust to retain ownership of the trademarks, and the value they hold, without paying Nicole or allowing her to maintain her equal ownership,” the lawsuit alleges.

Young is seeking damages in an amount to be determined at trial and wants the trademarks in question to be transferred to a trust.

Florida Divorce Fraud

I’ve written about various aspects of divorce and fraud before. In Florida, courts distribute the marital assets, such as bank accounts, between parties under the premise that the distribution should be equal, unless there is a justification for an unequal distribution.

Some of the factors to justify an unequal distribution of the property include things like the financial situation the parties, the length of the marriage, whether someone has interrupted their career or an educational opportunity, or how much one spouse contributed to the other’s career or education.

Another important factor is whether one of the parties intentionally dissipated, wasted, depleted, or destroyed any of the marital assets after the filing of the petition or within 2 years prior to the filing of the petition.

Dissipation of marital assets, such as taking money from a joint bank account, and transferring money and assets into separate accounts. In both cases, the misconduct may serve as a basis for assigning the dissipated asset to the spending spouse when calculating equitable distribution.

Misconduct, for purposes of dissipation, does not mean mismanagement or simple squandering of marital assets in a way the other spouse disapproves. There has to be evidence of intentional dissipation or destruction.

Big Egos

Young, who filed for divorce in June after 24 years of marriage, is asking for nearly $2 million in monthly temporary spousal support and is also seeking $5 million in legal fees, according to court documents previously obtained by People.

Young has claimed that her husband’s “net worth is estimated to be in the ballpark of $1 billion” in the filing, adding that he earned much of that sum during their marriage.

The rapper previously filed a response, revealing that the couple had a prenuptial agreement — despite initial reports that said they did not have one. Young, however, has disputed the validity of that agreement, claiming that she was forced to sign it and that Dre ripped it up, rendering it invalid after they were married.

The People article is here.

 

The Force of Bifurcation in Divorce

The force of bifurcation proceedings in divorce rises again as Star Wars actor, Ewan McGregor and his wife of 22 years, Eve Mavrakis, asked for bifurcation before finalizing their divorce last week. Being declared unmarried in the eyes of the state before signing the final divorce papers is becoming the hottest move in Hollywood.

Bifurcation

The Divorce Menace

The actor filed for divorce in January 2018. But in November 2019, McGregor asked a judge to declare himself and Mavrakis single before they’d finalized their divorce in a move known as bifurcation.

The court must not have kept the details of McGregor and Mavrakis’s proceedings under lock and key, as People magazine has obtained the settlement.

The settlement details obtained by People are pretty revealing: Mavrajus received roughly $14,934 per month in child support for their youngest child, the only one of the four who is under 18. Mavrakis also reportedly receives an alimony amount of $35,868 each month.

Florida Bifurcation

I’ve written about various family law issues before. One of those issues is bifurcation. Sometimes, people need a divorce, and like all members of the Jedi Order (which prohibits marriage), need a divorce fast. But can you get an immediate divorce?

Put another way, when can a family law judge enter a dissolution of marriage final judgment, but reserve jurisdiction to determine all of the other issues in a divorce relating to custody, support, and property rights for later?

In a highly unusual procedure, there’s also a trifurcated dissolution. The family law court first dissolves the marriage. Then separates the remainder of the financial issues, and reserves on timesharing and child support for the children.

The real issue is bifurcation, and it is a split procedure of entering a final judgment to divorce and keep power over the case to determine all the other issues. The practice is rare and limited to special cases.

In general, family law judges try to avoid this kind of split procedure. The law is designed for one final judgment and one appeal of divorce. Splitting the process can cause a lot of legal and procedural problems which result in delay and additional expense to people.

So, in Florida this split procedure is really only used when it is clearly necessary for the best interests of the parties or their children. The convenience of two law professors to remarry would not justify its use.

The Dark Side

McGregor and Mavrakis, who’s a French-born production designer, separated in 2017, so there was an argument that anything McGregor made after that point would not be subject to the division of assets. However, the judge designated his 2018 Disney film, Christopher Robin, for which he earned $3,000,000, community property—meaning that Mavrakis would be entitled to her share of the earnings.

in a judgement purportedly obtained by People, McGregor, 49, and Mavrakis’ divorce was finalized o with a judge appointing both of them joint legal and physical custody of their youngest child.

The two have agreed to continue to “have a flexible custodial schedule to accommodate” their daughter’s schedule, according to the documents.

The two have also split their assets, although any earned income from films or TV series McGregor has starred in the past — such as Fargo, the Star Wars prequels, the Trainspotting films, Big Fish, Moulin Rouge, Emma and Now You See It, among others — are considered community property and all residuals and royalties will be split with Mavrakis.

McGregor and Mavrakis met on the set of the British TV crime series Kavanagh QC, and they were married in 1995. Mavrakis is a production designer who was born in France and raised in China. She also served as a production interpreter on the Chinese set of Steven Spielberg’s 1987 movie Empire of the Sun.

A family source confirmed the two had separated in May 2017 amid news McGregor was spotted kissing his Fargo costar, actress Mary Elizabeth Winstead.

After winning the Golden Globe for best performance by an actor in a limited series or motion picture for television in 2018, McGregor thanked Mavrakis and Winstead, 35, in his acceptance speech, saying, “I’ve always loved being an actor and hanging out with actors and I got amazing actors to work with on this and it wouldn’t be any Emmett or Stassi without David, Michael, Carrie Coon and there would be no Rey without Mary Elizabeth Winstead so thank you very much.”

McGregor pointedly thanked his ex during his acceptance speech, saying, “I want to take a moment to thank Ev, who always stood beside me for 22 years and my four children, I love you.”

The Vanity Fair article is here.

 

Equitable Distribution of Personal Injury Awards

Comedian Tracy Morgan is not amused a court may have to consider the equitable distribution of his multi-million-dollar personal injury award after his terrible accident. Less than a month before his fifth wedding anniversary, he and his Wife announced they filed for divorce.

personal injury

The Rock

“Sadly, after nearly five years of marriage, Megan and I are filing for divorce,” Morgan confirmed in a statement to E! News on Wednesday, July 29.”This is a challenging time for all involved, so I ask that you please respect our privacy.”

It’s also been three years since a Walmart truck slammed into the back of Morgan’s limo van on the New Jersey turnpike. His friend, comedian James McNair, was killed and two others were seriously injured.

Morgan suffered a broken leg, broken ribs and what his lawyer describes as a “traumatic brain injury.” One year after the crash, he talked about the long road to recovery.

The truck driver in the accident, Kevin Roper, later pleaded guilty to vehicular homicide. Walmart took full responsibility for the crash and awarded Morgan and one of the other passengers a settlement that has been reported to be as high as $90 million.

Will Tracy’s wife be entitled to any of the personal injury settlement between Walmart and Tracy?

Florida Divorce Personal Injury Awards

I have written about equitable distribution in Florida before. In a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, a court must set apart to each spouse that spouse’s non-marital assets and liabilities.

When distributing the marital assets between spouses, a family court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on all relevant factors.

What about a $90m personal injury award? The supreme court of Florida has held that in determining whether a worker’s compensation award is marital property, the trial court should use an analytical, rather than a mechanistic or unitary, approach.

The court should consider the purpose of the award and focus on the award’s “elements of damages.” Only that portion of damages paid to the injured spouse as compensation for past lost wages and loss of earning capacity is to be considered marital property and subject to equitable distribution.

Damages for future loss of earnings and loss of earning capacity and future medical expenses are considered to be the non-marital, separate property of the injured spouse.

Keep in mind that the award may be considered in fashioning alimony and support awards.

The Hard Place

Wollover, 33, made the request in her divorce filing. She also wants the “30 Rock” star to pay her alimony as agreed upon in their prenuptial agreement, which they signed on Aug. 5, 2015.

Morgan, 51, filed his response one day after Wollover and requested joint legal and shared residential custody of their daughter, according to docs. He also wants the court to allocate parenting time “in the best interests” of Maven.

“Sadly, after nearly five years of marriage, Megan and I are filing for divorce,” Morgan said in a statement to Page Six following Wollover’s divorce filing. “This is a challenging time for all involved, so I ask that you please respect our privacy.”

The news of Morgan’s split comes just a few months after he made comments about their sex life while in quarantine during a TV interview in April.

On a more serious note, in an interview with Oprah Winfrey after recovering from the car crash, he called Wollover “a strong woman” for how she oversaw his treatment in the hospital.

“I’m glad I’m here,” he told Winfrey during their sit-down at the time. “I’m glad my wife is over there.

The E online article is here.

Unequal Distribution in an Unequal World

There may be an unequal distribution in an unequal world, after former Minneapolis police officer Derek Chauvin’s wife filed for divorce. She is asking for the couple’s two homes in their divorce. She might just be able to walk away with them if he doesn’t contest her request pretty soon.

Unequal Distribution

Uncommon Loons

Kellie Chauvin came to the U.S. as a child refugee from Laos. The couple met at the hospital she used to work at when Chauvin brought a suspect in for a health check. They later married on June 12, 2010, in Washington County.

She filed for divorce two days after her husband was charged with murder and manslaughter in the killing of George Floyd, who died after then-officer Chauvin planted his knee on Floyd’s neck for nearly eight minutes as Floyd lay in handcuffs.

The homes are only one part of a marital estate, and without understanding what the other person is being awarded outside of the homes, [the divorce petition] is not actually telling you whether this person is asking for more than 50 percent.

Derek Chauvin, had 30 days from the date he received notice of the divorce petition to file an answer and counter-petition if he wanted to challenge any of his wife’s proposals. That expired Friday.

If no answer and counter-petition are filed by the 30-day deadline, a petitioner can wait a period of time and ask a judge to proceed by default, which could grant what was requested.

Florida Unequal Distribution

I have written about property division, called “equitable distribution” in Florida, before. Florida, like Minnesota, is an equitable distribution state when it comes to dividing houses and other marital properties in divorce.

That means that in a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, a court must set apart to each spouse that spouse’s non-marital assets and liabilities.

When distributing the marital assets between spouses, a family court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on all relevant factors.

However, if there is a justification for an unequal distribution, as in the Work divorce, the court must base the unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.

Additionally, courts can consider the contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.

However, courts generally can’t base an unequal distribution on one spouse’s disproportionate financial contributions to the marriage unless there is a showing of some “extraordinary services over and above the normal marital duties.”

Land of Lakes

Kellie Chauvin, a former Realtor who was unemployed when she filed the petition, requested a “fair and equitable division” of personal property, vehicles and all bank, retirement and investment accounts. She neither sought nor offered alimony payments.

She asked for sole ownership of their primary home in Oakdale and a townhouse in Windermere, Fla., which were both bought after they married in 2010 and are listed in both of their names.

The Chauvins bought the Oakdale house in 2017 for $260,000. It is now valued at $273,800, according to Washington County property records. They bought the Florida townhouse in 2011 for $210,900; property records put the value last year as $226,282.

Outstanding mortgages and equity, which were not addressed in the divorce petition, are key in determining whether acquiring both homes would be a financial boon, but it’s not unusual for such petitions to be vague, and for exact property appraisals and financial accounting to be determined at a later date.

Derek Chauvin’s pension from his 19-year career at the police department could also factor in the division of assets. The pension was not specifically addressed in the petition. Chauvin, who was fired days after Floyd’s death, has not begun collecting his pension so its gross value has not yet been determined. Once it has, it will be public information.

Defaulting in a divorce is rare, but people do regularly miss the deadline to respond for a number of common reasons, including financial problems, mental health issues and other life events. And right now, Derek Chauvin has bigger things to worry about, and is due in court Sept. 11 for a hearing in the criminal case.

The Minneapolis Star Tribune article is here.

Photo credit John Picken from Chicago, USA / CC BY (https://creativecommons.org/licenses/by/2.0)

 

Property Division and the Family Castle

For many American families, their home is their castle. When divorce is on the horizon, your castle may fall under attack. Florida’s property division statute requires an equitable distribution of all marital property, but it is not a how-to guide. Money magazine has an article looking at some of your options.

Property Division Castle2

The Coronavirus Crash

Before the silent enemy Covid-19 hit us, the median value of a home in the U.S. was $247,084, and the average amount of mortgage debt a person topped $202,000.

With many experts predicting the coronavirus siege will lead to a surge in divorce, deciding how to deal with your marital home – and its accompanying debt – can be a dangerous financial burden in every case. Below are some strategies to defend your castle.

Selling the Castle

For many couples simply putting a shared home up for sale may seem like the simplest solution, but remember, that step won’t automatically erase all mortgage headaches or end the need to co-operate with your former spouse.

You will still need to agree on a realtor and asking price as well as determine how the continuing mortgage payments will be made. Will you be splitting the expense 50/50? Will the spouse who continues living there make the full payment?

If your home sells for more than the outstanding balance on the mortgage, how will the remaining proceeds be divided between you both after settling the joint debt? Worse, if you end up underwater on the mortgage, you’ll have to decide if you can even afford to sell it and how you’ll pay off the remaining debt if you do.

There are also the taxes. You can each exclude the first $250,000  in capital gains — the amount your home has appreciated in value since you bought it — from your taxable income, if the home was your primary residence and you owned it for more than two years.

If you opt to file a joint tax return, you can exclude up to $500,000. Earnings above that exclusion or on the sale of, say, a vacation property, could stick you with a tax bill.

Keeping the Home

Divorce upends life, and it makes sense that a majority of the time at least one spouse isn’t ready to leave the marital home and add the stress of moving to their to-do list.

The idea of remaining in a familiar, comfortable home can seem even more compelling when there are children who might have to change schools or leave behind friends.

But many financial advisors and divorce attorneys caution against keeping your old home after a divorce, calling it one of the biggest mistakes you can make during the process.

If you want to remain living in the home you once shared with your ex-spouse, you need to carefully review your budget and weigh whether you can individually afford it.

Refinancing the Mortgage

If you have $50,000 in equity in your current home and you’ve agreed to a 50-50 split of its value, you’ll need to come up with $25,000 to buy out your former spouse. In return, your ex-spouse should remove their name from the property title, typically using a quitclaim deed.

If you don’t have the cash, you might need to give up other assets in the divorce negotiations equal to the home’s equity, such as your investment account, 401(k) or IRA.

However, qualifying as a single person can be challenging as lenders will examine your individual earnings, credit history, and savings to see if they believe you’re capable of repaying the loan.

Staying Co-owners of the Manor

If you are unable to refinance or payoff the mortgage, you may be able to keep the status quo. This is not recommended, as it requires a high degree of trust in your former spouse.

Since both your names will remain on the home and on the mortgage, you’ll both be liable for making payments. Should your ex-spouse stop contributing their share, you could face more debt, foreclosure, bankruptcy or poor credit.

Florida Property Division

I’ve written about houses and property divisions before. In Florida, every divorce proceeding the court has to set apart nonmarital property, and distribute the marital property.

Florida judges always begin with the premise that the property distribution should be equal, unless there is a reason for an unequal distribution based on several factors.

One of the factors the court has to consider is the desirability of keeping the home for the kids or a spouse, if it’s equitable to do so, if it’s in the best interest of the child, and financially feasible.

However, whether keeping the home for yourself or the kids is financially feasible requires you to have an honest look at what you can and can’t afford. Some strategies to keep the home include:

Raiding Savings

While not the best solution, pulling from savings can help you keep hold of the home. By obtaining a court ordered qualified domestic relations order or QDRO, you can gain access to a portion of your ex-spouse’s employee retirement plan assets.

Such funds may not be subject to the 10% early withdrawal penalty for people under age 59.5, meaning you’ll save more on taxes by using this money to secure your home than you would by tapping other accounts you may have.

Alternatively, if you have Roth IRA savings, you could pull an amount equal to what you’ve contributed tax and penalty free, again making it a smarter way to meet your mortgage payment needs.

Raising Rents

If you’re really determined to keep the home, but cannot pull from savings or refinance, it might be worth brainstorming ways you can earn income from it to help cover the mortgage and upkeep costs.

Renting out the whole home while you’re on vacation – or even just a bedroom or two when in town – could make you hundreds a night. Airbnb hosts, for instance, can make over $900 a month according to research.

If you can’t refinance the mortgage in your own name, keeping the home isn’t a wise decision. It is better to restructure your life in a way that makes sense in the long run, rather than pillage your other financial accounts.

The Money article is here.

 

The Ultrawealthy Divorce Differently and there’s more Good News on Coronavirus

Locked out of your $88 million Manhattan condo? The rich are different when it comes to equitable distribution. As the Wall Street Journal reports, how ultrawealthy couples divorce is becoming much harder as financial portfolios become more complex. There’s also good news on the coronavirus.

Ultrawealthy Divorce

Enter the Badlands

Many ultrawealthy people in a divorce are having trouble finding assets, like the front door keys to their $22 million Hawaii home. A big reason for the complexity is the widespread use of trusts. Trusts can play a big role in divorce depending on your circumstances.

Setting up a trust may allow you to safely transfer ownership of your non-marital property into a separate trust. If you divorce, a trust like this may make the entire property, and its appreciation, out of equitable distribution.

South Dakota is becoming a hotspot for trusts, holding almost a trillion dollars in trust assets because state laws have made South Dakota more favorable for trusts. Generally, trust assets are managed by a Trustee for the benefit of beneficiaries.

A trust can be drafted with a variety of different provisions in order to accomplish a variety of different goals. In every trust, the Trustee must account to the beneficiaries about its actions, and it must be fair and prudent in dealing with the trust and beneficiaries.

So, what happens if one spouse is named as the beneficiary of a trust, and that spouse benefits from the trust during the marriage? The answer to questions like this is not always straightforward in every state.

Florida Equitable Distribution

I have written about Florida equitable distribution during divorce before. In Florida, the legislature has created a statutory scheme to guide family courts in the equitable distribution of assets upon dissolution of a marriage.

Under Florida’s equitable distribution statute, marital assets include assets acquired during the marriage, individually by either spouse or jointly by them. Nonmarital assets include assets acquired by either party prior to the marriage, and assets acquired in exchange for such assets.

The equitable distribution statute also creates a rebuttable presumption that assets acquired by either spouse during the marriage are presumed to be marital assets: “All assets acquired … by either spouse subsequent to the date of the marriage and not specifically established as nonmarital assets … are presumed to be marital assets …. Such presumption is overcome by a showing that the assets … are nonmarital assets ….”

That’s where trusts come in. Although your home became a marital asset when you purchased the home and jointly titled it in you and your spouse’s names, the home can cease in character to be a marital asset upon its transfer into a trust.

At that point, the home can become part of the assets of the Trust, an entity distinct from either a Husband and Wife. Transferring a home into a Trust has the possibility to place the home beyond a family court’s reach for purposes of equitable distribution in a divorce.

In South Dakota We Trust?

As the Wall Street Journal reports, Texas financier Wilbur Bosarge and his wife of 22 years, Marie Bosarge, conducted business affairs through various trusts. For instance, they used a trust to buy a $45 million dollar flat in London’s “Billionaire Square.”

After Marie flew back and forth between Texas and London decorating and hand selecting furnishings for the new London flat, she never got to see it finished.

By the time it was complete, her husband left her for a 20-something Russian mistress who moved into the flat instead.

Owning the flat through a complex network of trusts and limited liability companies, the husband is using the ownership structure to eliminate her stake in the property. The wife may be stuck, because a family court may not be able to decide property rights of a nonparty to a divorce, like a trust or limited liability company.

Good News on Coronavirus

Let’s face it, the media has a tendency to give extra coverage to bad news, because readers find negative stories more eye-catching.

But, from lower toxic fumes to more time spent with family, there is always good news to report during the high point of the novel coronavirus pandemic.

  • First, there are tentative signs of infection curves flattening. Concentrate on statistics about the tendency of curve flattening – not the rising death rates – as an early harbinger of the turning point.
  • Second, a major model has lowered its prediction for the death toll in the United States. The model predicts that some states will start to see fewer deaths from COVID-19 each day and some states may have even passed their peak.
  • Third, pharmaceutical firm Abbott Labs said it was launching a test for the SARS-COV-2 virus that could take as little as five minutes and “be run on a portable machine the size of a toaster”. German technology company Bosch says it has done the same. Johnson & Johnson said it had identified a vaccine candidate and the US government was investing $1 billion in its development.
  • Fourth, other groups are investigating ways to start human trials for vaccine candidates early, and are using brave and willing volunteers, who haven’t been at all hard to find.

The Wall Street Journal article is here.

 

Big British Property Division Case

A British woman who “sacrificed” her career as a lawyer so she could be a stay-home mum and raise her children has won an unequal property division on top of an equal share of the family’s wealth after her divorce. This case proves that the interruption of your career can impact your divorce.

Merry in England

A woman who “sacrificed” her career as a solicitor so she could look after her children has won compensation on top of an equal share of the family’s wealth after her divorce.

The ruling could have implications for other divorce cases in which one partner has stepped back from their career for the good of the family, a lawyer said. The Cambridge graduate was embroiled in a fight over cash with her millionaire husband, who is also a solicitor, after the breakdown of their marriage.

A judge has decided the pair, who were married for about a decade and have two children, should split assets of nearly £10 million equally but that the woman should get another £400,000 in compensation for curtailing her legal career.

Mr. Justice Moor said there had been “relationship-generated disadvantage” as the husband was still able to enjoy a “stellar” career.

[The woman] viewed herself as the parent who would take primary responsibility for the children. The husband’s career took precedence. I accept that it is unusual to find significant relationship-generated disadvantage that may lead to a claim for compensation but I am clear that this is one such case. I have come to the conclusion that an appropriate sum to award for relationship-generated disadvantage, over and above her half share of the assets, is the sum of £400,000.

As a talented lawyer, our client sacrificed a potentially lucrative career for her family and to care for the children. Although Mr. Justice Moor has made clear this decision should not open the floodgates to a raft of relationship-generated disadvantage claims, the judgment affirms that in truly exceptional circumstances the principle of compensation still exists in family law, and rightly so.

Florida Property Division and Careers

I have written about property division before. Florida’s equitable distribution statute begins with the premise that the distribution should be equal, but the trial court may make an unequal distribution when proper justification is demonstrated.

The equitable distribution statute lists several factors for a trial court to consider in making this determination, and the court must support its equitable distribution scheme with specific factual findings.

As in the recent England case, a Florida trial court follows several factors to support an unequal distribution, including: what were the contributions to the marriage by each spouse, the economic circumstances of the parties, the duration of the marriage, and the interruption of personal careers.

Generally, the fact that one spouse is the primary bread winner won’t support an unequal distribution in Florida.

Stiff Upper Lip

In another British case, a businesswoman who left behind her career in order to become a “stay at home mum” while her husband continued with his high-flying career has been awarded virtually all of the family fortune by a divorce judge.

Jane Morris, 52, had been criticized by her former husband for not bringing more money in after they split, having quit her career as a recruitment consultant to keep house for him and their three children for 20 years.

However, it emerged that she was awarded half a million pounds while husband, Peter Morris, the managing director of a software company with a seven-figure turnover, was left with just £66,000.

Details of the case came out as he launched a challenge in the court of appeal against the financial outcome of the divorce and a six-week prison sentence which is hanging over his head after it was imposed on a suspended basis for non-payment of alimony and support.

The court heard that the 51-year-old businessman “took credit” for the “high standard of living” the couple enjoyed in their £1.2m cottage in the Chiltern Hills.

However, the couple’s “extravagant” spending, both during their marriage and after their “bitterly contested” break-up in 2013, brought them “to the brink of financial disaster”, reducing multi-million-pound family assets to just £560,000.

Awarding 90% of the family assets to her, the judge had said that she “needs adequate maintenance” because sacrificing her career had left her with a “low earning capacity… in her middle fifties with rusty skills.”

Morris had hit out at his wife’s own expenditure and criticized her for not earning more, having re-entered the labor market since they separated. But she was ruled to be “a sensible woman” who was “probably in need of emotional and psychological comfort” during her own spending sprees.

The Guardian article is here.

 

A Strange New World of Equitable Distribution

Divorce typically involves dividing up the marital property. Every case can be different in what there is for equitable distribution. Houses and retirement accounts are pretty common, and collectible cards and dolls are rarer, but actor William Shatner’s divorce involved something truly strange: horse semen.

Equitable Distrib Horse Semen

To Seek Out New Life

Actor, William Shatner, famous for his role as captain of the Star Trek Enterprise, was recently awarded horse breeding equipment in his divorce settlement with ex-wife Elizabeth Shatner.

The actor’s divorce was settled in Los Angeles Superior Court Tuesday, according to court records. They separated from one another in February 2019.

But the most interesting part of the former “Star Trek” actor’s divorce is what he wanted as equitable distribution. Shatner, who is a horse breeder, will get “all horse semen” as a part of the settlement.

Wine, pets, antique rifles, baseball cards, sports memorabilia are some of the more unique “assets” many of my cases involved. Like any important asset, horses can be a challenging asset to divide.

Valuation of horses can requires knowing their training, winnings, and earnings. Horse ownership also requires knowing the horse’s board, routine maintenance, insurance costs, breeding rights, showing rights, and cash earnings from breed organizations.

Interestingly, the horse’s frozen semen is often extremely valuable and must be spelled out in any divorce order or agreement along with rights to any potential offspring.

That’s because a horse’s DNA and cloning are big topics in the horse industry. The issue of equitable distribution is also complicated by the fact that it is not just the rights to a horse but also the rights to the horse’s DNA, and the rights to any cloning of the horse.

Florida Equitable Distribution

Does a family court have to distribute horse semen? I have written about property division, called “equitable distribution” in Florida, before. Florida is an equitable distribution state when it comes to dividing business assets in divorce.

That means that in a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, a court must set apart to each spouse that spouse’s non-marital assets and liabilities.

When distributing the marital assets between spouses, a family court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on all relevant factors.

Boldly Going Where Few Men Have Gone Before

As additional equitable distribution, the Shatners divided their four horses between them. The captain will get “Renaissance Man’s Medici” and “Powder River Shirley”, while his ex-wife will get “Belle Reve’s So Photogenic” and “Pebbles”.

This is not the first horse semen rodeo for Shatner. He was sued in 2003 by ex-wife Marcy Lafferty Shatner, who claimed he violated the equitable distribution settlement in their 1995 divorce that allowed her one breeding privilege per calendar year with their American saddlebred stallions.

William and Elizabeth Shatner also divided their homes, including a home in Versailles, Kentucky that Elizabeth will get. In 2018, Shatner tweeted that he only visits his Kentucky home “once or twice a year.” But perhaps now it’s his old Kentucky home.

William and Elizabeth Shatner raised and trained American saddlebreds at their Versailles farm. He had homes in Kentucky, including Lexington, since the mid-1980s.

The couple will not receive any financial support from one another as a part of the settlement. They were married for 18 years.

The Lexington Herald Leader article is here.

 

A Slice of Equitable Distribution and Alimony

The wife of Papa John’s founder John Schnatter filed for divorce, claiming her marriage with the unemployed pizza executive is “irretrievably broken,” according to court papers filed in Kentucky. If there is no prenuptial agreement, how big a slice of equitable distribution of the stock and any alimony is Annette entitled to?

Slice of Equitable Distribution

When the Moon Hits Your Eye

Papa John’s is an American pizza restaurant franchise. It runs the fourth largest pizza delivery restaurant chain in the United States, with headquarters in Jeffersontown, Kentucky, a suburb of Louisville.

Papa John’s was founded in 1984 when “Papa” John Schnatter knocked out a broom closet in the back of his father’s tavern, Mick’s Lounge, in Jeffersonville, Indiana. He then sold his 1971 Camaro Z28 to purchase US$1,600 worth of used pizza equipment and began selling pizzas to the tavern’s customers out of the converted closet.

John’s pizzas became so popular he moved into the adjoining space. The company went public in 1993 and a year later it had 500 stores. By 1997 it had 1,500 stores. And in 2009, John got his Camaro Z28 back after offering a $250,000 reward.

Schnatter and Annette Cox, 59, had been married since April 11, 1987, and separated on April 1 of this year, the wife’s attorney Melanie Straw-Boone writer in papers filed in Oldham Circuit Court. Cox called Schnatter a 57-year-old Louisville resident who “is not employed,” according to the boilerplate, three-page petition.

“The marriage between petitioner and respondent is irretrievably broken”.

The couple have two children and share unspecified real estate holdings, the filing said. Schnatter stepped down as CEO in late 2017 after reports surfaced that he uttered a racial slur during a conference call.

Alimony, Equitable Distribution, and the Length of Marriage

In Florida, the duration of marriage is an important topping in divorce cases. I’ve written about the types of alimony awards available in Florida before. For instance, Florida Statutes dealing with alimony specifically limit the type of alimony awards based on the duration of the marriage.

So, for determining alimony, there is a rebuttable presumption that a short-term marriage is a marriage less than 7-years, a moderate-term marriage is greater than 7-years but less than 17-years, and long-term marriage is 17-years or greater.

Florida defines the duration of marriage as the period of time from the date of marriage until the date of filing of an action for dissolution of marriage.

The duration of marriage can also be a large slice of the property division. When a court distributes the marital assets and liabilities between the parties, the court begins with the premise of an equal split.

However, there are times and cases which justify an unequal distribution based on several relevant factors. One of the factors a court can consider is the duration of marriage, in addition to other factors.

Dividing assets between spouses – especially large companies such as Papa John’s – is not as simple as taking a pizza cutter to a hot pie; even with agreements. Very often assets have appreciated over the course of several years. The longer the marriage is, the more a business interest can appreciate. When property appreciates, you need to distinguish between passive and active appreciation. A passive asset could be an investment account which is never traded.

A business, on the other hand, is an active investment, and the percentage a spouse is entitled to may depend on different things. Even with the most sophisticated couples, such as the Schnatter/Cox family, unless you clairvoyant, issues will arise that no one considered in earlier agreements, and are prime for negotiation.

Pizza Ready?

Separate from the divorce case, Schnatter filed a lawsuit Thursday against an advertising firm which was at the center of the racial slur incident.

Schnatter allegedly uttered the slur during a call with advertising firm Laundry Service, which the pizza executive accused of recording him without his consent. The lawsuit claims that Laundry Service leaked excerpts of the conference call, which broke a nondisclosure agreement.

Two weeks ago, Schnatter accused his former company of making substandard pizza. He said his former company has failed in keeping up with its long-time slogan: “Better Ingredients, Better Pizza.”

“I’ve had over 40 pizzas in the last 30 days, and it’s not the same pizza,” Schnatter told WDRB, a Fox affiliate in Louisville, Kentucky. “It’s not the same product. It just doesn’t taste as good.

The NBC News article is here.

 

Enforcing a Gusher of an Equitable Distribution Award

After his divorce, Todd Kozel, a former oil executive, was ordered by a family court to transfer 23 million shares from his oil company to his wife as equitable distribution. When he didn’t, a $38 million judgment was entered against him. Why was that enforcement order overturned?

Equitable Distribution Oil

Striking Oil

Todd and Ashley married in 1992, and she filed for divorce in 2010. Todd is the chief executive officer of Gulf Keystone Petroleum, Ltd., an oil and gas exploration company.

When the parties divorced, much of their shared wealth consisted of Gulf Keystone stock, which is publicly traded in London. The parties settled after he agreed to transfer Gulf Keystone stock to Ashley as equitable distribution.

Under their Settlement Agreement, the husband was obligated to transfer twenty-three million shares of Gulf Keystone stock to his wife as equitable distribution on or before January 27, 2012. Upon delivery, the former wife would then be free to sell her stock to anyone at any time.

But Todd didn’t deliver his twenty-three-million shares by January 27, 2012. Instead, he transferred the stock to her in four batches at later dates: (1) 2,034,447 shares on January 30, 2012; (2) 3,798,886 shares on February 3, 2012; (3) 5,666,667 shares on February 21, 2012; and (4) 11,600,000 shares on March 1, 2012.

Invoking the trial court’s continuing jurisdiction to enforce the agreement, Ashley filed papers with the family court. Although her filings were styled as petitions to enforce the agreement, they alleged what amounted to claims for money damages for alleged breaches of their agreement.

After granting partial summary judgment on liability and holding a trial on damages, the family court found Todd in breach and awarded her: $34,611,702 as damages for his failure to deliver the stock on time and another $3,850,500 as damages for the breach to provide tax information.

Florida Equitable Distribution

Why was Ashley awarded so much of Todd’s Gulf Keystone stock? I have written about equitable distribution before. Florida is an equitable distribution state when it comes to dividing business assets in divorce.

In a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, a court must set apart to each spouse that spouse’s non-marital assets and liabilities.

When distributing the marital assets between spouses, a family court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on all relevant factors.

When the Oil Runs Out

While Todd was in default for his failure to timely deliver the Gulf Keystone stock, he made all of the additional equitable distribution payments required. On November 28, 2012 — eight months after the final transfer of stock — Ashley argued that Todd’s breach of the agreement caused her to suffer substantial damages because it denied her an opportunity to sell the stock at a time when market conditions were favorable.

But Todd argued that a family court lacks jurisdiction to consider Ashley’s claim because what she was asking for amounted to a claim for general damages for breach of contract.

So, Ashley amended her petition, styling it as one to “enforce” the agreement. She alleged that the court had jurisdiction to enforce the agreement through an award of damages for losses that she allegedly incurred as a result of the failure to deliver the stock timely.

The family judge awarded her $34,611,702 and another for the tax basis dispute $3,850,500, to be placed in escrow (presumably pending the outcome of a refund request to the IRS).

The question in a case like this is whether and to what extent a family court’s continuing jurisdiction to enforce a final judgment extends to claims for money damages for breaches of a settlement agreement.

When a court orders compliance with the terms of a settlement agreement – when it requires a party to perform an obligation in the agreement — it is engaged in proper post-judgment enforcement over which it has continuing jurisdiction. But when a court awards damages as a substitute for a party’s performance, it is not engaging in legitimate post-judgment enforcement but a separate claim for breach.

The former wife sought and the family court awarded general, benefit-of-the-bargain damages for the breach of the agreement that was not specified in the agreement. In reversing the judgement, the appellate court ruled that “couching these remedies as “enforcement” of the [agreement] does not change what their substance is: general damages for breach.”

The opinion is here.