How are substantial alimony awards like these calculated in high net worth divorces? And what can these celebrity splits teach the rest of us about alimony negotiations?
Prenups matter — if they are ironclad
A prenuptial agreement can be a key way to decide on alimony in divorce even before the couple gets married. The prenup can spell out exact terms for payments. However, these documents must be created with great legal care.
Dr. Dre claimed that a prenup he and Nicole Young signed before their 1996 marriage included asset division and alimony terms in the event of a divorce. However, Young contested the prenup, claiming that Dre “tore up” the document a few years into their marriage as a sign of his commitment to her. (And therefore, she claimed that she was able to request a much higher alimony amount than the prenup called for.) Young has also claimed that she never received a copy of the document after it was signed. Fighting over the validity of the prenup is a major source of contention in their ongoing divorce battle. For now, Dr. Dre has agreed to pay Nicole $300K per month until final terms of a divorce settlement are reached.
The lesson for the rest of us: Prenups work, but you need to follow the rules in establishing one TO THE LETTER. A prenuptial agreement can pre-decide exact alimony terms, including stipulations about how many years must pass in the marriage before alimony should be considered, or raising alimony by certain amounts the longer the marriage lasts. Agreeing on the terms is one hurdle, but adhering to the correct legal process can make all the difference in having a judge enforce the prenup at the time of the divorce.
Young’s claim that “she never received a copy” of the final prenup is something that Dr. Dre’s lawyer should be able to dispute. (For example, by showing the sending of a certified letter to Ms. Young with the prenup.) In New Jersey, there is a detailed process for establishing prenuptial agreements. Each party must have their own attorney, full financial disclosure must be provided, and a judge must approve the prenuptial agreement at the time it is signed. This provides everyone with peace of mind that the document will endure and be enforceable should a divorce ever takes place. If a copy of the prenup is ever “ripped up” or misplaced, the original will still be intact.
Prenups can be incredibly powerful tools in divorce, but only if they were formed properly. If you are considering a prenup, talk to an attorney about doing it right.
It’s all about standard of living established in the marriage
Kelly Clarkson’s alimony situation highlights the growing number of women paying alimony rather than receiving it. The deciding factor comes down to which spouse is the higher earner. That spouse is then obligated to provide the other spouse with enough financial resources to maintain the standard of living established in the marriage.
With a hit music career and talk show, Kelly Clarkson is one of the top earning entertainers in 2021. When deciding alimony in the couple’s divorce, Clarkson’s $200K/month might seem like an incredible amount of money to payout to Blackstock to maintain the lifestyle he enjoyed during the marriage. However, to keep it in perspective, Clarkson is rumored to pull in more than $25 million in income per year from her TV/music career and related pursuits. Clarkson will continue to pay this amount until a final settlement is reached.
There is one other unique aspect to Clarkson’s divorce. Her soon-to-be ex husband was once Clarkson’s business manager, but left that post to live on the couple’s ranch in Montana. Blackstock could very well make the case that as her business manager, he was a lynchpin in providing support and opportunities/connections for Clarkson to reach new heights in her stardom. He may have passed up other paying opportunities to represent other entertainers to solely focus on his wife’s career. A judge may decide to compensate Blackstock for the work he put in assisting his wife’s career.
This is something that can also happen in non-celebrity divorces. For example, if one spouse puts the other through medical school or law school, or somehow sacrifices their own career for the sake of their spouse’s career advancement, they may be able to apply for “reimbursement alimony” to pay back these financial contributions. This is one of several types of alimony alternatives.
Alimony awards don’t always last forever
Dr. Dre, Kelly Clarkson and Scooter Braun have each had it noted about their alimony situations that paying out hefty monthly sums is TEMPORARY while final negotiations in the divorce settlement take place. The awarding of temporary (or “pendente lite” alimony as it’s called in New Jersey) is common. This is money meant to help the lesser earning spouse to pay household bills and lifestyle expenses to maintain that “equal standing” to the lifestyle enjoyed during the marriage. This may or may not be the same amount decided on in the divorce.
It could be that the final divorce settlement includes a lump sum payment of alimony or some other negotiated outcome using other assets, and veers away from a month-by-month payout. These alternative arrangements can be helpful for spouses who crave more financial independence or who wish to truly sever all ties with each other.
Also, it should be added that alimony reform law has made lifetime permanent alimony almost a thing of the past except in rare circumstances. (In New Jersey, longterm alimony is called “open durational” alimony.) Even when monthly alimony payments are part of a divorce settlement, in most cases they will wind down upon the paying spouse’s retirement, or if the receiving spouse cohabitates with a new partner or remarries.
Celebrity divorces often offer teachable moments for the rest of us. What questions do you have about your alimony arrangements or divorce negotiations? We’re here to help. Call us at 888-888-0919 to set up a time to speak with one of our family law attorneys, or please click the green button below to get started.