In October 2009, after 30 years of marriage, Jamie McCourt filed for divorce from her husband. It was a standard filing, citing irreconcilable differences. The high-net-worth divorce proceedings which ensued were anything but “standard” and involved an alleged affair, lots of press, bankruptcy, and a baseball team.
The McCourts: A Lesson in High-Net-Worth Divorce
At the time of the filing, Jamie had just been fired from her role of CEO of the Los Angeles Dodgers baseball club. Frank, was owner and chairman of the club, which he bought in 2004 for $430 million. The couple had achieved significant success in business, but all the “fun” began once Jamie filed for divorce.
Once divorce proceedings began, numerous allegations emerged from both sides. Frank alleged that Jamie had had an affair with her bodyguard and driver, Jeff Fuller. As a result, Jamie was fired from her job for “insubordination, non-responsiveness, failure to follow procedures, and inappropriate behavior with regard to a direct subordinate.” At the time of the firing, Jamie was still a co-owner of the team. She alleged that she was fired by Frank so he would be able steal her share of the team, since, having been fired, she would have no right to any claim of any portion of the company. That’s when she filed for divorce.
Community Property Laws in California
California is a community property state, which means all property and assets (and debts) acquired by the couple during marriage is legally considered community property owned by both spouses equally and should therefore be divided equally in divorce.
However, things get considerably more complicated when one or both spouses has a high net worth or substantial property and other assets, which is where the expertise of a complex property division attorney is vital. In the state of California, complex property division involves the distribution of high-value marital assets, including retirement accounts, ownership rights to a business, professional practices and investment portfolios, among others, which can be a hotly contested issue for some couples.
How a Los Angeles Divorce Can Affect Your Assets
Emotions are typically running high when the beginning stages of a divorce are put in motion. Often, high-earning spouses going through the steps of getting a divorce simply want some assurances that the assets and property they owned before their marriage, and the lifestyle they have grown accustomed to in marriage, are protected and that they won’t be left in financial ruin once the divorce is finalized. California law dictates across the board that community property be split 50-50 between spouses seeking a dissolution of marriage, but not all divorces are that simple. Los Angeles is an affluent city and many couples enter into a marriage with significant property or earn high-value assets during the course of their marriage, or both. And when such a marriage ends in divorce, it is imperative that each spouse receives a fair division of the marital property, which may include the increase in value of real estate and retirement accounts, among other shared assets. When it comes to splitting up valuable marital property in divorce, it is imperative that the assets, property and debts are evaluated carefully and thoroughly to ensure an equitable division of property between the spouses upon the dissolution of the marriage. It is also important that each spouse is forthcoming about his or her income and earnings, as well as debts, so that an accurate and reasonable agreement can be reached.
Some of the high-value assets at risk in high net worth divorces include:
• Stock options
• Corporate business assets
• Business valuations
• Professional practices
• Investment portfolios
• Residential and commercial real estate
• 401(k)s, IRAs and other retirement accounts
Even Uglier for the McCourts
In addition to the fact that the two-some shared the Dodgers, things got even uglier when the allegations started flying. She alleged that Frank was understating his net worth by hundreds of millions of dollars to avoid paying her, meanwhile stating that she needed as much as $989,000 a month to maintain her lifestyle. That lifestyle stipend, as it was soon discovered, was salaries for a household staff of eight, tuition and living expenses for the couple’s four sons, private jet travel, accommodations at five-star hotels, security escorts when traveling, as well as house calls from her hair stylist and make-up artist.
Bankruptcy for the Dodgers
In addition to the divorce, the Dodgers were also headed for the skids financially.
A one-day trial was scheduled to determine whether the Dodgers was community property of Frank and Jamie McCourt or the sole property of Frank. That one-day trial was canceled when the Dodgers filed for Chapter 11 bankruptcy protection on June 27, 2011.
On March 27, 2012, it was announced that the Dodgers would be sold to Guggenheim Baseball Management LLC, a group of investors fronted by Guggenheim CEO Mark Walter, former LA Lakers player Magic Johnson, baseball executive Stan Kasten, and film mogul Peter Guber. The sale exceeded $2 billion, making the sale the largest for a professional sports team in history,
The Final Divorce Settlement
After much back and forth – in both court and in the tabloids, the McCourt’s high-net-worth divorce was finally settled for a $131-million settlement, about $900 million shy of a 50-50 split on January 19, 2012. At that point, the Dodgers and team’s media rights had already been agreed on to be sold.
“Jamie simply chose the security of a guaranteed $131 million payment, plus more than $50 million in real and personal property, over the uncertainty and risk presented by the valuation and sale of the Dodger assets,” the ruling stated.
And with that, the so dubbed “War of the Roses” came to an end.
Filing for Divorce in Los Angeles
In order to file for divorce in the state of California, there are certain residency requirements that must first be established. First, either you or your spouse must have been a resident of the state for six months prior to the divorce filing, and the spouse doing the filing must have lived a minimum of three months in the county where he or she plans to file the divorce.
A divorce case in Los Angeles begins when the spouse requesting the divorce (the petitioner) files a petition for divorce, asking the court to dissolve the marriage and address any other issues arising out of the marital relationship, such as child custody, child support, spousal support and the division of debts and assets. If the other spouse (the respondent) fails to file a response to the petition for divorce, or the divorce is uncontested, meaning the parties are able to work together to settle their issues via written agreement, the petitioner can move forward with filling out the proper forms and filing them with the court. If the divorce is contested, meaning the parties are unable to agree on issues central to the divorce, the case will go to trial.
As you can see, the process of filing for divorce in Los Angeles is not all that different for high-net-worth individuals and entrepreneurs as it is for the average person, though with the former there are greater assets at risk. As a result, in high-net-worth divorces in Los Angeles, it becomes more important than ever that the high-net-worth spouse enlist the help of a knowledgeable divorce attorney and keep a careful accounting of his or her property and assets.
How an Experienced High-Net-Worth Divorce Lawyer Can Help
Any couple going through a divorce likely has to face the issue of asset and debt division, but when a couple’s or individual’s high-net-worth comes into play, the stakes are automatically higher and the two parties are often willing to fight harder and more aggressively to reach an outcome that is in their favor. An experienced Los Angeles divorce attorney can help you navigate the complex issues that come along with a high-net-worth divorce, including property settlement and spousal support. An important consideration in terms of property settlement, for example, is the fact that separate property, or property that the high-net-worth spouse owned prior to the marriage, are not included in California’s community property provision.
One way to avoid disputes that can cause divorce proceedings to drag on is to prepare a detailed accounting of your assets and any offshore accounts, real estate holdings and businesses, which can be complicated and time-consuming. If you are involved in a high-net-worth divorce in Los Angeles, our legal team at Divorce Lawyers Los Angeles can help you determine which property and assets are separate and which are marital and can help you establish the appropriate value for each. Our attorneys have a passion for representing clients in all areas of family law, including marital property division and asset protection, and are willing to go to battle on your behalf, should that become necessary.
Free Divorce Consultation in Los Angeles
No divorce is without its complications. However, the circumstances surrounding a high-net-worth divorce in Los Angeles can make the divorce process even more complicated and contentious. High-net-worth divorces in Los Angeles that involve significant marital assets require the help of an experienced divorce lawyer who isn’t afraid to aggressively represent your best interest in mediation or at trial if your case goes to court. Our attorneys at Divorce Lawyers Los Angeles provide competent, professional representation for individuals involved in contested divorces involving significant assets, investments or business interests. If you are going through a divorce and are concerned about protecting your wealth, contact our legal team today for a free initial consultation.
Divorce Lawyers Los Angeles
5455 Wilshire Blvd
Los Angeles, CA 90036
Phone: (213) 550-4600