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We’ve all heard stories about celebrity divorces that become caustic and bitter disputes, fought tooth and nail in the courts for months –and sometimes even years.
But, why are these cases so complex and difficult? What could possibly cause such a long, protracted fuss?
The answer is simple. Typically, the big thing celebrities battle most about when they divorce is this:
Intellectual Property Rights
And quite often, these are rights you should be fighting for, too.
Without question, no one “enjoys” dividing marital property. Remember the famous scene from When Harry Met Sally when the recently divorced Harry (Billy Crystal) urges his starry-eyed friends Jess and Marie to label their belongings?
“Do me a favor –for your own good,” Harry says. “Put your name in your books right now, before they get mixed up and you don’t know whose is whose. Because some day, believe it or not, you’ll go fifteen rounds over who’s going to get this coffee table –this STUPID, WAGON WHEEL coffee table!” Classic.
Of course, as a Divorce Financial Strategist(TM), I totally understand what Harry was trying to say. But, in all honesty, there’s a lot more to it than that.
Sure, divorce requires dividing marital property such as homes, bank accounts, retirement plans, and yes, maybe even coffee tables (especially if they are antiques). But, in many cases, women neglect to realize that divorce doesn’t only split tangible belongings. Divorce can impact intellectual property rights, too, and depending on your individual circumstances, these rights can be the most valuable of all. They can be worth thousands, if not millions, of dollars.
Celebrity couples (and their attorneys) are well aware of the value of intellectual property rights –and that’s precisely why celebrity divorces can be so contentious.
As a point of reference, consider this: The divorce dispute between Michael Douglas and his first wife, Diandra, in now entering its fourteenth year! Within the last few months, Diandra filed suit claiming that she is entitled to half Michael’s earnings from Wall Street: Money Never Sleeps, a film released in 2010. Why? Because in their initial divorce settlement (back in 2000), Michael agreed to pay Diandra half of the acting earnings he accrued while they were married, including any residuals, merchandising and ancillary rights.
Reportedly, their agreement also contained language that stated Diandra would be entitled to additional money from any future “spinoffs”. According to her latest suit, Diandra contends that since the new film involves a character that Michael developed in the original Wall Street (which was filmed during their marriage), she is entitled to half of his earnings from the new movie, too.
All this may seem fairly straightforward, but it’s not. Here’s the complication. Diandra’s entire case now revolves around this single, seemingly picayune, point: Is the new movie a spinoff or a sequel? If it’s a spinoff, she gets half. If it’s a sequel, she gets nothing.
Or, in other words . . . it’s all about intellectual property rights.
If you’re considering divorce, there are a few essential points you need to know to better understand how the split could impact your intellectual property.
For starters, let’s be clear about who may have intellectual property. If you’re an author, songwriter, artist, poet, actor, designer (software, website, fashion, packaging, architectural, etc.) . . . or if you’re an inventor, entrepreneur or business owner . . . or if you have a website, logo, tag line, articles and/or white papers you’ve written . . or (I think you get the idea) . . .then you have intellectual property.
Also, understand that there are four main types of intellectual property:
4. Royalties and other contractual rights
And any of these may be considered marital property, which means they may be divided during divorce.
(For a more detailed discussion, see my article about the differences between marital property and separate property.)
Rules about how intellectual property can be divided vary from state to state, but the general rule of thumb is this:
Value that’s created during the marriage must be divided. And, by extension, any value that’s created before or after the marriage is typically excluded from division.
In Community Property States, both spouses are usually considered equal owners of all marital property, so any value created from intellectual property would be split 50-50. There are nine Community Property States: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
The remaining 41 states are known as Equitable Distribution States, which consider factors such as the length of marriage, the age and health of the parties, their income and future earning capacity and many other factors when determining a settlement. Settlements in these Equitable Distribution States do not need to be equal (50-50), but they should be fair (equitable).
(Note: some states have laws with both Community Property and Equitable Distribution characteristics, so always consult with your divorce attorney to ascertain which laws are specific to your state and situation.)
Regardless of what state you live in, what’s referred to as “creative control” typically remains with the inventor or creator of the intellectual property. Think about it for a minute and you’ll realize this is a reasonable approach –it usually maximizes future income potential, which obviously works in the best interests of both parties.
Intellectual property rights are just one of many assets that will need to be divided and will have financial and tax implications. Having a qualified divorce financial planner on your team can not only keep you out of trouble, but he/she can also help secure your financial future. After all, at the end of the day, you may not want that awful, wagon wheel coffee table –but you may, indeed, want your fair share of any patent, trademark, copyright or royalty payments.
Jeffrey A. Landers, CDFA™ is a Divorce Financial Strategist™ and the founder of Bedrock Divorce Advisors, LLC (http://www.BedrockDivorce.com), a national divorce financial strategy firm that exclusively works with women, who are going through, or might be going through, a financially complicated divorce. He also advises women business owners on what steps they can take now to “divorce-proof” their business in the event of a future divorce. He can be reached at Landers@BedrockDivorce.com.
All articles/blog posts are for informational purposes only, and do not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney.
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