DIVORCE—Failed Marriages Often Cost More Than Failed Deals

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All’s fair in love and war, except when it comes to divorce.

At least that may be the understandable assertion of the numerous L.A. moguls who have seen their empires seriously diminished by gargantuan divorce settlements.

In the mid-1980s the divorce settlement between TV producer Norman Lear and his ex-wife, Frances Lear, became famous for hitting the $112 million mark. Frances Lear put the money to good use. She moved to New York and spent $25 million to launch “Lear,” a magazine geared for women over 40. The magazine lasted for six years.

While $112 million is indeed a regal payout, particularly in mid-1980s’ dollars, it hasn’t pushed Norman Lear off the list of L.A.’s richest individuals. His wealth is estimated at $880 million today.

When News Corp. chief Rupert Murdoch and his wife, Anna, divorced in 1999 (when the media mogul’s primary residence was in the L.A. area), details of the settlement weren’t publicized, but the split was said to be amicable, with Anna Murdoch retaining a seat on the company’s board.

The peace may be understandable, after 32 years of wedlock and three kids, but don’t expect it to last. Some speculate that a battle for control may arise among his ex-wife, children and present wife (whom he married days after the divorce was finalized) after Murdoch dies.

While Lear and Murdoch have their respective empires relatively intact, others haven’t been so fortunate. David Price, chairman of National Golf Properties, had an estimated net worth of $570 million in 1998, qualifying him for inclusion on the wealthiest list. But when his divorce was finalized with ex-wife Dallas Price, he lost his membership in the exclusive club. She ended up with half his empire.

Other local moguls who have been slammed in divorce settlements include insurance super-salesman Peter Mullin, former Chrysler chief Lee Iacocca, movie director James Cameron, construction equipment magnate Richard Colburn and biotech entrepreneur Alfred Mann.

So goes the law in California, which is a community property state where assets are to be split 50-50 when two people divorce.

It doesn’t have to end up that way. Movie director Steven Spielberg split from actress Amy Irving, who reportedly received somewhere between $80 million and $110 million. Like Lear, Spielberg’s split didn’t even budge him a bit from the mogul list.


Protecting assets

Those who have the money to buy the best often apply the strategy to legal advice.

As a result, prenuptial agreements that limit how much money a spouse gets if things don’t work out often serve as a brake on runaway divorce settlements.

While prenuptial agreements weren’t de rigeur 25 to 30 years ago when some wealthy individuals first married, they are alive and well today. Pre-nups are particularly prevalent during a second marriage when spouses may have a different view of marriage and all its pitfalls. And when individuals are more wealthy and worldly.

“The predominance of a prenuptial agreement is found after the first marriage,” noted Beverly Hills divorce attorney Sorrell Trope, who recently handled actor Nicolas Cage’s divorce from actress Patricia Arquette.

Besides pre-nups, another strategy used by wealthy individuals to limit the size of their divorce settlement is to play “hide the assets.”

“It may not be that easy for wealthy women (to get a high settlement) if they don’t know where the assets (of their husbands) are,” said feminist attorney Gloria Allred, who has handled her share of divorces for the rich and famous. “I’ve seen some women in affluent situations where all they were getting is an allowance. They’ve never taken an active role in money management. They thought everything was going to last happily ever after.”

What does happen with the wealthy is that divorce proceedings are likely to last longer because there is more money to be spent on lawyers, consultants, forensic accountants and various other experts. Used to getting only the best that money will buy, the wealthy routinely spend $650 an hour for a top divorce attorney and don’t even blink at the prospect of shelling out legal fees for years.

“There’s always a lot of property at stake and complicated issues,” Allred said, noting that these can take years to figure out.

The emotional issues, however, are as strong whether you’re divorcing a multimillionaire or a middle-class machinist. “Some of the divorces I handle can get very nasty,” said Beverly Hills attorney Norman Rose, who has been a divorce attorney to the wealthy for more than 40 years. “I’ve had people who have divided their homes living in two different parts because they don’t want to be the one who moves out. I’m talking about very wealthy people who can afford to move out.”


More divisive than money

The top emotional issues, however, don’t boil down to property values or bank accounts or credit cards. The hottest divorce fires get fanned when child custody and visitation rights go on the table.

“It’s almost World War III in the child custody battles,” Allred observed.

But you may never know it. The wealthy are discreet in their divorce proceedings, and their divorce attorneys don’t go around blabbing about their clients or how much money they’ve agreed to pay. There would be a large price to pay for a big mouth.

Even multibillionaire Kirk Kerkorian who’s been divorced three times sometimes flies below the radar. The 83-year-old was divorced last year from 30-something Las Vegas tennis instructor Lisa Bonder after a month-long marriage.

You didn’t read a word about their divorce settlement.

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