Divorce attorney Jason V. Owens explores how celebrity prenuptial agreements often unravel in the face of public scandal.
Media reports on the divorce of disgraced movie mogul Harvey Weinstein have once again demonstrated how public scandal destroys much of the protections offered by prenuptial agreements. Like Tiger Woods before him, Weinstein – who has an estimated fortune of $240 million – entered a prenuptial agreement to limit his financial exposure in the event of divorce from his estranged wife, Georgina Chapman. It appears that Chapman appears to be receiving substantially more than the amount set out in the prenuptial agreement, almost certainly due to the scandal that has engulfed Weinstein.
Weinstein Prenup: Reportedly Limited Chapman’s Payout to $11.75 Million
In December, TMZ reported that the prenuptial agreement entered by Weinstein and his estranged wife, Georgina Chapman, was supposed to limit Chapman’s payout as follows:
The Weinsteins' 10th anniversary was Friday, and while they obviously have nothing to celebrate ... the milestone triggers a major bump in spousal support. The prenup they signed in December 2007 says Georgina gets $400k annually for every year of marriage, if they divorce now. …. The docs also spell out her cut of their marital assets. For the first 5 years of marriage, Georgina gets $250k per year -- and for years 6 through 10, she gets $700k per year. That totals up to a lump sum payment of $4.75 million.
But wait, there's more -- a housing allowance. Mrs. W gets $25k per month of marriage, with a cap of $3 mil ... which they've reached after 120 months together. …. Add in the 10 years of spousal support -- for another $4 mil -- and the grand total is $11.75 million.
Given that Weinstein is worth between $240 million, while Chapman is worth closer to $20 million, a prenup limiting Weinstein’s financial exposure to less than $12 million following a ten-year marriage should have offered
NY Post: Chapman Receiving up to $20 Million in Divorce Settlement
Despite having a prenuptial agreement that purported to limit total payments to Chapman to $11.75 million, People Magazine is reporting that Chapman’s attorneys have negotiated a more generous divorce agreement:
The disgraced movie mogul will pay the fashion designer a divorce agreement worth roughly $15 to 20 million, a source tells PEOPLE.
Chapman will also get primary custody of their two children, ages 7 and 4, but she and Weinstein are still working out the details of the division of their marital assets.
Obviously, the details matter here. If Chapman receives $15 million, would be approximately 20% more than the sum provided in the prenup. However, if the final number for Chapman is $20 million, she will have nearly doubled the financial terms of the prenuptial agreement.
Scandal is Often the Great Equalizer in Prenup Cases
In 2016, we asked, How much will Johnny Depp Regret not having a Prenuptial Agreement in his Divorce from Amber Heard? In the blog, we discussed the granddaddy of all “broken prenup” cases, Elin Nordegren v. Tiger Woods:
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.
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.
Clearly, Weinstein’s career and public profile have been devastated by a scandal that has transformed into a worldwide movement. Despite the scope of the scandal, however, it appears that Weinstein may end up paying between 1.2x and 1.8x the amount contemplated in his prenuptial agreement with his wife of ten years. In contrast, Woods reportedly paid Nordegren five times what was promised in the couple’s prenuptial agreement after only five years of marriage. Why the difference?
The reason scandal is “the great equalizer” in prenuptial cases has everything to do with career and reputation. When we compare Woods and Weinstein, we start to see why Woods was so willing to exceed the limits of his prenuptial agreement compared to Weinstein. The first contrast between Woods and Weinstein is their respective professions. While Weinstein is certainly a high-profile Hollywood executive, at the time of his divorce, Tiger was one of the most recognizable and famous individuals on the planet. Unlike Weinstein, who made his fortune producing movies, most of Tiger’s income came from striking endorsement deals with PR-conscious companies in the buttoned-up world of golf.
For Some, the Biggest Cost in a Messy Divorce is to Their Public Image
Of course, the biggest difference between Weinstein and Woods came down to a single question: What do you have left to lose? As destructive as Tiger’s scandal was at the time, he was still a relatively young athlete with a huge number of (mostly male) fans. Although badly damaged, Tiger’s career was not over. In contrast, the destruction of Weinstein has been thorough, ranging from the likely bankruptcy of his business, to looming civil suits by potential victims, to the possibility of criminal charges.
The final difference between Woods and Weinstein is their respective abilities to earn money in the future. At the time of his scandal, Tiger was the #1 golfer in the world, and the prospect of a return to the top of his profession seemed attainable. Against this backdrop, paying Nordegren was a smart business move, where a messy divorce could have prevented Tiger from moving on from the scandal. Simply put, with a $600 million fortune and diminished-but-still-promising career ahead of him, Woods could afford to pay Nordegren $100 million.
Weinstein appears to be in a much darker place. With a net worth of between $240 million and $300 million, a payout of $20 million to Chapman won’t break the bank for Weinstein, but it is very hard to say where Weinstein might be in five years. (After all, it is fair to ask when his estimated worth was calculated – before or after his business appeared destined for bankruptcy.) For Weinstein, the bottom line is that he simply couldn’t afford to pay Chapman the kind of money that Nordegren received from Woods.
Weinstein Survives Child Support Challenge by Previous Wife
Even as Weinstein has wrapped up his divorce with Chapman, Weinstein has faced difficulty in another court over child support payments owed to his previous wife, Eve Chilton, with whom Weinstein shares 19- and 14-year-old daughters. According to Page Six, Weinstein told Chilton that he would be unable for his two daughters for “at least one year”. Chilton reacted by filing an action in a Manhattan court seeking to force Weinstein to prepay up to $5 million in child support.
Chilton’s preemptive strike was rejected by the Manhattan Supreme Court Justice Michael Katz, who held that it would be inappropriate to force Weinstein to prepay years’ worth of child support when Weinstein had never been late with previous payments. According to Page Six:
Katz found that Chilton … failed to show “a consistent pattern of arrears.” That showing is necessary under the law to force Weinstein to prepay the child support.
Even if Chilton’s gambit failed this time, her claim may be a sign of things to come for Weinstein, whose shattered reputation makes him a target for litigation of every stripe.
Lessons for the Real World: Not Just Celebrities Affected by Public Perception
Obviously, few divorcees face the kind of public scrutiny afflicting Tiger Woods and Harvey Weinstein during their respective divorces. However, there are still lessons some lessons to be drawn from such cases. You don’t need to be a celebrity to be affected by public perception and reputational damage. Many divorce attorneys use the potential release of embarrassing information as a pressure tactic in divorces involving non-celebrities. The last thing most of us want is for our family, employers or co-workers learn about allegations of infidelity, criminal conduct or financial impropriety arising out of a messy divorce.
Celebrities experience threats to their reputation on a grand scale that can dramatically change the outcome of a divorce. Many of these same forces operate on a smaller scale in more typical divorces, however. Human nature is often the same in either instance: reputational damage is enough of a threat that many individuals are willing to pay to protect their good name.
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.