Noteworthy Nuances of High Profile and Celebrity Divorce (Part Two)

Stacy D. Phillips

Part Two: A Particular Kind of Tug-of-War

In dissolutions of high-net-worth and celebrity marriages or domestic partnerships, intellectual property rights, profit participation, residuals, and royalties often represent the most valuable of all the assets. They frequently become a battleground for control. Contracts are typically made over long periods of time, and are constantly renegotiated and amended. Valuing such assets can quickly become a hotly contested issue. These assets require a sophisticated and experienced family law attorney, working with a top forensic accountant, who understands the nuances involved.

The matter of support is often a particularly difficult challenge when the major earner of the couple is a professional sports figure. Because their ability to play and earn at the highest levels is limited to a finite time period, support (both spousal and child)—and custody, for that matter—could change dramatically when the professional’s career ends. The lifetime of an entertainer’s career can be similarly brief or span decades, presenting equally complex implications. These are nuances that must be managed when the income of the earning spouse/parent exceeds the couple’s marital standard of living and/or the reasonable needs of the children.

Child custody is another highly nuanced area of family law, particularly when one or both parents are required to be “on location” or travel extensively for business. The amount of time spent with the children, where that time is spent, the level of child support, the ages of the children—all are factors that impact custody agreements. If a parent’s absence is due to filming away from home, for example, is that parent entitled to makeup time? Are the children to visit on location, missing school, friends and their normal routine? Are the children of an age to fly alone? These sorts of custody arrangements are, in many cases, subject to annual renegotiation depending on the working parents’ professional demands. All too often, these negotiations can devolve into contentious Control Wars.

What is especially difficult about most divorce and custody cases is that this tug of war over control does not begin or end in my office or the courtroom. It may go on for years, long after the divorce decree or judgment of paternity is official. I truly believe that a better understanding of how to mitigate control battles would greatly benefit anyone contemplating or in the midst of divorce, and those who suffer from what I term “divorce residue.” Attorneys, even the best ones, cannot be expected to stop these battles or manage the other party. I have seen, however, that if both parties resolve to diminish the legal, financial, and emotional Control Wars, there is hope for the prospect of healing and peace.

Noteworthy Nuances of High Profile and Celebrity Divorce (Part One)

Stacy D. Phillips

Part One: Control is the Common Denominator

As a family lawyer specializing in high-net-worth and high profile cases for more than 30 years, you can imagine that I have seen it all. Representing many celebrities—often involving financially complex, high conflict matters—I have observed that whatever the salacious headlines, particular facts, and individual circumstances of each case, there is one important commonality: control.

It is a given that every case I handle will have its share of “issues,” many of which go beyond the division of assets. Frequently, some urgent situation or chronic problem creates a dispute involving the need/desire/obsession of one party to dominate the other. Neither gender has exclusivity when it comes to pursuing, possessing, and asserting control, whether during the marriage, the divorce, or its aftermath. The reality is: Control is prevalent in any relationship. And, when couples are jockeying for it, a legal case becomes a contest. All too often, contests escalate to wars because, by nature, human beings are competitive.

Control is a fickle power. It can change hands at the flick of a need or want, or due to external forces (such as employment or health problems), or internal circumstances (such as falling in love with someone else). The battle for control is amplified in most personal relationships that fail, and may not be limited to the former couple. It can also include various personal and business associates and advisors.

Celebrity clients often face the same issues as other divorcing individuals; however, there are important nuances at play. There are issues of income, support, child custody, and legal fees, of course, but not of the garden variety. Often it is precisely these complications that can cause the Control Wars, leading to prolonged litigation and negotiations. There are no cookie-cutter solutions.

Many wealthy individuals, and especially celebrities, face paternity suits. In these cases, innocent children often become a lever for control. Moreover, if paternity is established, the father could have substantial child support responsibilities, considerable legal fees, and too often, personal and professional images can be tarnished by leaks to the media from the party trying to gain leverage. Sadly, after the dust settles in these battles, the children of such relationships frequently become collateral damage.

Next month, in Part Two of this article, I will share some interesting nuances particular to high profile, celebrity, and high-net-worth divorces and child custody matters.

Ch-ch-ch-Changes! Preparing for Trump’s Tax Code Reforms

Michelle Piscopo and Mary Vidas

Donald Trump was sworn in as our country’s 45th President on January 20 and, prior to his inauguration, he vowed to immediately set into motion many of the promises he made during his campaign. One of the promises made by President Trump during his campaign was to reduce taxes across the board—especially for working class and middle class Americans.

Currently, there are seven different individual tax brackets ranging from 10% to a maximum of 39.6%. Under the plan proposed by President Trump, there would only be three tax brackets:

  • 12% for individuals earning less than $75,000;
  • 25% for individuals earning more than $75,000 but less than $225,000; and
  • 33% for individuals earning more than $225,000

President Trump’s plan also proposes raising the standard deduction from $6,350 to $12,000 for single tax filers and from $12,700 to $30,000 for joint tax filers, and eliminating the head of household tax filing status. Under President Trump’s plan, the corporate tax rate would be reduced from 35% to 15%.  While Trump alone cannot change the tax code, the proposal put forth by House Republicans is quite similar to the Trump proposal. The House Republican plan agrees with Trump’s three tax brackets—so changes in tax rates are inevitable.

How will this impact you?

Lower taxes means higher net income. And, that higher net income could impact you if you are paying or receiving child support, spousal support, maintenance, or alimony. For example, under the current tax code, an individual who earns $500,000 per year would be in the 39.6% tax bracket, which results in net income of $302,000. Under President Trump’s proposal, an individual who earns $500,000 would be in the 33% tax bracket, which results in net income of $335,000. That additional $33,000 of net income will impact your support calculation. Depending on whether you are the party receiving support or the party paying support, this could be good news or bad news. We expect quick changes from the new administration and are keeping a close eye on any changes to the tax code. As this issue develops, if you have any questions about how new tax laws could affect your support order, the attorneys in all states of our matrimonial group are prepared to answer them.