Massachusetts divorce lawyer Jason V. Owens reviews the impact of prenuptial agreements on divorces involving public figures through the lens of Johnny Depp’s upcoming divorce from Amber Heard.
We recently learned that Hollywood superstar Johnny Depp (age 52) will soon be getting divorced from Amber Heard (age 30) after just fifteen months of marriage. Reportedly, Depp and Heard never executed a prenuptial agreement, which begs the question: how much will the lack of a prenuptial agreement cost Depp in the upcoming divorce? The answer is: probably not very much in a conventional divorce trial, but the lack of a prenup could have significant impact on out-of-court settlement negotiations between Depp and Heard.
According to People Magazine, Depp has a total net worth of over $400 million. Depp reportedly earned $30 million last year and $100 million as recently as 2010. In contrast, Heard’s total wealth is reported at somewhere between $4 million and $9 million, and she earned $416,667 for the 2015 film, the Adderall Diaries. Clearly, Depp is far wealthier than Heard.
Had their marriage lasted longer, it is likely that Heard would have been entitled to both a substantial alimony order and a significant share of Depp’s assets in a divorce. Because Depp and Heard were only married for fifteen months, however, little of Depp’s net worth has been woven into the fabric of the marriage. In short, Depp amassed most of his wealth before marrying Heard, and Heard may have a hard time convincing a judge that her brief contribution to Depp’s home life, professional life and emotional well-being was so significant (over fifteen months) that it entitles her to a large share of Depp’s fortune.
In conventional divorce terms, Depp faces only limited legal exposure if a divorce trial ensues, despite the absence of a prenuptial agreement. Depp is famously private, however, and a typical prenup would have included confidentiality provisions, limiting Heard’s ability to pressure Depp during negotiations by speaking or leaking information to the press. Without a prenup, Heard will be more free to exploit Depp’s desire for privacy by turning their divorce into a public spectacle. Depending on how much Depp values his privacy, the absence of a prenup could cost Depp millions in a final divorce, where Heard has little to lose – and Depp has a lot to lose – if the divorce plays out in the public eye.
Table of Contents for this Blog
- The Probable Legal Standard: Heard Entitled to Portion of Wealth Accumulated During Short Marriage
- Who Needs a Prenuptial Agreement? It Depends Where you Live.
- Celebrity Prenups: Do they Matter?
- Good News for Heard: in High Net Worth Divorce, Everything is Relative
The Probable Legal Standard: Heard Entitled to Portion of Wealth Accumulated During Short Marriage
As discussed below, the ordinary rules for divorce often don’t apply in cases involving famous individuals, due to the distorting effects of celebrity and reputation. In a conventional divorce, a judge would likely find that Heard was entitled to half of the total combined wealth earned by the parties during the 15-month marriage. (Press reports on celebrity divorces frequently refer to a spouse being entitled to half of the income earned during the marriage, but the reality is that neither party gets to keep the earnings Depp and Heard spent over the last year. Instead, Heard’s share would be limited to a portion of what the parties earned and saved in the last fifteen months.)
Given Depp’s huge earnings compared to Heard, there is no guarantee that a judge would even award Heard half of what the parties have earned and saved in the last fifteen months. However, where 50% of the couple’s combined savings from a 15-month span probably represents only a small fraction Depp’s overall wealth, a judge would likely view a 50% assignment to Heard as a clean and efficient way to resolve the case without truly denting Depp’s considerable fortune. (What is less clear is whether Heard would be entitled to half of the increase in Depp’s overall net worth – including the gains and appreciation Depp has enjoyed on his premarital investment and real estate holdings – or if Heard’s share would be limited to just the new earnings saved by the parties in the last fifteen months.)
Of course, this is a Hollywood divorce, so the ordinary rules may not apply.
Who Needs a Prenuptial Agreement? It Depends Where you Live.
The value of having a prenuptial agreement varies widely from state to state. In so-called “community property” states, a prenup is less important, because the division of assets in such states only includes property that is held jointly in both parties names at the time of the divorce. In other words, in community property states, only assets such as joint bank accounts (in both parties’ names) and real estate deeded jointly in both parties’ names, are divided in a divorce. The need for a prenup is reduced in these states, where the separate property of the parties is already excluded from the subsequent divorce as a matter of law. (The community property states are Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin and Puerto Rico.)
California, of course, is an equitable division state, which means that all of Depp and Heard’s property is subject to division in a divorce, regardless of whose name the property is held in or when the property was acquired. It is for this very reason that prenuptial agreement are considerably more important in equitable division states. Had Depp’s marriage with Heard lasted longer, there is no question that Depp’s decision to forego a prenup would have subjected him to steadily increasing exposure – as the length of the marriage grew – resulting in Heard’s entitlement to an ever-increasing share of Depp’s assets in a divorce. Because this was a short-term marriage, however, the risk to Depp is much reduced, at least in conventional divorce terms.
Most equitable division states have some version of Ch. 208, s. 34, the Massachusetts property division statute that lists the factors a judge must consider when dividing marital property. First among these factors is always the length of the marriage. In a short-term marriage, judges look immediately to the assets each party brought into the marriage, and the starting point is generally to return the parties to the financial positions they occupied before getting married. If the parties amassed wealth through combined earnings during the marriage, a judge will often consider the new savings to be the only assets that should be divided equally. Each year that passes in a marriage complicates this scenario, however. (For example, if Depp and Heard had been married for three years, how would a judge treat the investment gains that accrued on Depp’s fortune? While such gains would arise out of Depp’s premarital assets, the increase in wealth would have occurred during the marriage. Arguably, Heard could be entitled to half of the increase in value during the marriage, even if Depp retained the underlying assets in a divorce.)
In addition to protecting separate property in the event of a divorce, a prenuptial agreement offers protection against the payment of future alimony. Like property division, however, alimony laws vary widely from state to state. In Texas, Mississippi and Tennessee, for example, a spouse can only receive alimony after a ten-year marriage, making prenuptial protection unnecessary for shorter term marriages. Other states, such as Massachusetts, limit the amount of alimony and duration of alimony based on the earnings of the parties and length of the marriage. California, where Depp and Heard are getting divorced, has a broad alimony statute with no restrictions based on the length of the marriage. Unsurprisingly, Heard has already filed a motion seeking temporary alimony during the pendency of the divorce. Heard’s request would likely be denied if the parties’ executed a prenuptial agreement containing an alimony waiver. Because they did not, the outcome of Heard’s request is anyone’s guess.
Celebrity Prenups: Do they Matter?
Perhaps the most famous celebrity prenuptial agreement belonged to Tiger Woods, whose prenup reportedly limited payments to his wife, Elin Nordegren, to $5 million. After just five years of marriage, however, Woods ended up paying Nordegren a reported $100 million from an overall fortune of $600 million. In short, Nordegren received five times the assets promised under the prenup.
In the wake of the Woods settlement, many wondered if Tiger’s attorneys felt compelled to renegotiate the prenup out of concern that a judge would look past the prenup due to Woods’ adultery. However, my view is that it was not Woods’ adultery, per se, that created the huge payout. Rather, it was Woods’ status as a major public figure whose endorsement deals in the notoriously conservative world of golf made the protection of Woods’ reputation a key component of the divorce negotiation. (It didn’t help matters that the tabloids were already in a feeding frenzy over Tiger’s picadillos without any help from Nordegren.)
With a fortune of $600 million, Woods is exceptionally wealthy. However, there are many individuals with comparable wealth whose public profiles are much lower than that of Woods, whose unique celebrity status caused his infidelity to become a tabloid sensation. There is little question that Woods’ prenuptial agreement was capably prepared by a qualified attorney, and would have likely been enforceable in many respects in court. The argument that Woods violated the spirit of the prenuptial agreement through his serial philandering could have had some merit, but Nordegren’s entitlement to Woods’ assets would have been limited by the 5-year duration of the marriage, even if the prenup was not enforced.
Ultimately, Tiger’s decision to settle had less do with the conventional rules of divorce than his need to regain control of his tattered public image. The last thing Woods needed was Nordegren appearing on Oprah Winfrey (or somewhere similar) touting a new book about “surviving infidelity”, and increasing the public scrutiny of Woods. Instead, the divorce agreement – which included a confidentiality clause – helped Woods stop his bleeding in the tabloids and preserve some of his endorsements with sponsors Nike, Rolex, Fuse, NetJets, EA Sports and Kowa before it was too late.
Good News for Heard: in High Net Worth Divorce, Everything is Relative
Few can imagine the practical reality of Depp’s $400 million fortune, which represents an astronomical sum, even for attorneys accustomed to litigating high net worth divorce cases. So let us imagine a more modest fortune to illustrate Heard’s prospects in an upcoming divorce negotiation. Imagine that instead of $400,000,000, Depp was an ordinary, middle class citizen with total net worth of $400,000. Under these facts, most attorneys would advise the middle class Depp to offer a wife of fifteen months a moderate payment to permit her to restart her life and avoid litigation. For example, a single payment of $5,000 to resolve all disputes might be reasonable, if the wife agreed to waive alimony and all other claims.
Now multiply this hypothetical $5,000 payment by 1,000 times to bring it in line with Depp’s true wealth of $400 million. Instead of $5,000, Heard may be looking for $5 million. Where Heard has a total net worth of $4 million to $9 million, a settlement of $5 million could double her current net worth, making her divorce a financial windfall, given the short duration of the marriage. For Depp, such a payment might even be reasonable – under his unique circumstances – where $5 million represents just 1.25% of his total worth. Depp might consider this a reasonable price to pay for bringing the divorce to swift and private close with minimal press coverage.
From a divorce lawyer’s perspective, the real question for Heard becomes: how will she define “success” in her divorce from Depp? In considering this question, Heard might consider the story of Oksana Grigorieva, the former wife of Mel Gibson. In 2011, Grigorieva famously turned down a $15 million divorce settlement offer from Gibson, where Grigorieva and her attorneys believed that Gibson’s public meltdown provided Grigorieva with leverage for a more a generous payout. Soon after, a judge poured cold water on Grigorieva’s plan, however, and she ended up settling the divorce for a mere $750,000 payout.
The reality for Heard is that Depp would likely pay a substantial sum just to conclude the case quickly, minimize publicity and maintain his privacy. It is the job of Heard’s attorneys to determine what Depp’s maximum offer is likely to be, and determine how to maximize Heard’s leverage while avoiding the mistakes made by Grigorieva in the Gibson divorce. Unlike Gibson, whose reputation was in free-fall during his divorce from Grigorieva, Depp is currently a bankable Hollywood star who has made his fortune through family-friendly movies like Pirates of the Caribbean and Alice in Wonderland. Heard’s motion for temporary alimony strikes me as a signal to Depp that Heard will “go public” if her demands are not met.
As Grigorieva’s divorce from Gibson showed, appearing before a judge carries risks. In Heard’s case, the upcoming hearing for temporary alimony runs includes the risk that a judge will pour cold water on Heard’s desire for millions in payments before her case even gets started. A stern response from a grumpy judge could severely undermine Heard’s negotiating position moving forward. My prediction: the hearing will not actually take place. Instead, Depp and Heard will reach a temporary agreement on alimony and conduct the remainder of the negotiation outside of the prying eyes of the tabloid press. Heard’s final share of Depp’s assets? I’m guessing $20 million, but anything can happen in celebrity divorces, where the normal rules do not apply.
UPDATE (2016/05/28): Obviously, Amber Heard’s restraining order against Johnny Depp significantly changes the dimensions of this divorce. Will update accordingly.
About the Author: Jason V. Owens is a Massachusetts divorce lawyer and family law attorney for Lynch & Owens, located in Hingham, Massachusetts and East Sandwich, Massachusetts. He is also a mediator for South Shore Divorce Mediation.