With the Hollywood star’s $250-million-plus fortune already locked up, high-profile lawyers stress sensitivity to residency and religion as key differentiators for celebrity clients looking for discreet resolutions.
While Katie Holmes and Tom Cruise raised plenty of eyebrows during their five-year marriage, their divorce is practically a model for advisors who want to shield their clients’ feelings while protecting their wealth.
It only took 11 days for the lawyers to reach a settlement, saving both stars the expense, trauma and risk of career blowback of an extended or messy public custody fight.
And thanks to the smart decision to file in New York instead of Hollywood, Katie’s people managed to keep the details of how she’ll raise Suri almost entirely out of the public eye.
“Unlike California, divorce filings are not open to the public,” notes Manhattan family attorney Daniel Clement. “I suspect the main reason that Holmes filed in New York rather than California is privacy.”
Getting that privacy evidently mattered to Katie and her advisors made sure she got it.
To get a divorce in New York, she needed to establish at least two years legal residence on the East Coast, so she’s been working toward this — and documenting her visits — since at least 2010.
The minute she ran out the clock, she filed the papers, found another apartment and enrolled Suri in an elite local school.
Location is everything
Other than confidentiality and the right to petition New York courts if something goes wrong with custody of Suri, shifting venues didn’t really buy Katie much.
Despite speculation elsewhere, New York has finally joined the rest of the country as a no-fault state, lawyer Daniel Clement says, so it didn’t really matter who the aggrieved party was.
Both states also divide marital property equitably, which would leave Katie with the same split of the couple’s — mostly Tom’s — wealth either way.
But it’s not hard to imagine scenarios where a change of residency makes a huge difference for a client who may benefit from a different spousal division of the assets.
Smart premarital planning means smoother divorces
For Katie, marital property would be moot even if she didn’t have the luxury of picking an address from which to file the papers.
From all reports, Tom’s people got her to sign a prenuptial agreement that renounced her right to seek half of the roughly $250 million he amassed as the world’s top-paid movie star.
Simply having that deal in place puts them miles ahead of plenty of messy celebrity splits right there.
Furthermore, while the gossip columnists have speculated about the agreement awarding Katie $40 million to $50 million, her people insist that she walked away without taking a dime from Tom.
Why so magnanimous? Granted, Katie was a TV star in the ‘90s and has appeared in some movies, but at a measly-for-Hollywood $30,000 an episode, she’s not exactly a billionaire in her own right.
Unless she made some extremely good investments, estimates of her personal net worth being around $25 million are probably inflated as a matter of pure career earnings.
However, the $15 million Tom’s lawyers reportedly put in a trust for her and Suri before the wedding probably have something to do with it.
Remember, a substantial transfer of assets from the rich partner traditionally makes the contract go down a lot easier — and Katie’s father just happens to be a divorce lawyer, so he knows the drill.
Handing his fiancee $15 million five years ago likely saved Tom $120 million or more, not to mention the airing of whatever secrets he might have in court.
That works out for both parties, says Daniel Clement.
Otherwise, “as part of the divorce and the custody fight, Holmes and Cruise would have to expose not only details about their finances, but intimate details of their lives,” he says.
On the other hand, Tom has reportedly agreed to pay $10 million in annual child support for the next 12 years — a lot more than the normal New York cap of $23,000 a year — so it all comes out in the end.
She’s set up for the rest of her life even if she never works again. And she has no motive to complain.
Religion and other intangibles
With the money questions sewn up in advance, the lawyers got to spend those 11 days ironing out how Suri will be raised and how the stars would characterize the break-up to their fans.
“It’s clear that the spiritual upbringing of the couple’s only child Suri played a central role in the pair’s split,” says New Jersey divorce lawyer Bari Weinberger.
Katie has gone back to Catholicism and has signed Suri up for a church school. That’s controversial for Tom’s friends in the Church of Scientology, to say the least, but the religious terms of the settlement are under wraps.
Weinberger sees a lot of these “intangibles” play a huge role in divorce proceedings, so she’s sure to raise emotional and spiritual concerns with clients.
After all, couples may fight over money but it rarely makes them break up.
She’s even worked with clients to get them back together with their spouses when the emotional problems weren’t really as insurmountable as they thought.
That probably wouldn’t have worked for Tom and Katie, but your clients might have better luck.
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Source & Photo Credit: Scott Martin / TheTrustAdvisor.com