According to Forbes Magazine, it is unclear whether or not there is a pre-nuptial agreement between the parties.  This can certainly make distributing millions and millions of dollars between these two quite difficult.  One would like to think their presumably high-priced lawyers had the common sense to make them sign one. 

As happy as a couple as they may have been, we all know the divorce rate between celebrity couples is astronomically high.  So high in fact, it necessities a weekly blog!

The parties were married for seven years.  According to Forbes Magazine, over the past 10 years Ms. Klum’s earnings were approximately $108.7 million, plenty of which was earned via her contract with Victoria’s Secret.  She now has a lucrative contract with New Balance.  Forbes’ estimations indicate that Ms. Klum’s net worth is significantly higher than Seal’s – $50 million to $70 million versus $10 million to $15 million.

Perhaps the sales of Seal’s new album can help rectify that?  Regardless, it wouldn’t have an impact on any equalization payment he may be entitled to.

In Canadian law (and let’s assume for a minute that the parties are Canadian), any money earned post-separation does not have an impact on equalization.  Post-separation income is, however, relevant to spousal and child support payments.

If we also assume each of the parties’ Net Family Properties is reflective of their estimated net worth, then how would the division of their finances play out?

Section 5 of the Family Law Act, which applies to married couples going through the divorce process, reads as follows:

Equalization of net family properties
Divorce, etc.

5.  (1)  When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them.

Assuming the estimates in Forbes Magazine are accurate, then how much money would Seal be entitled to?  According to the Family Law Act, he could receive anywhere from $17.5 million to $30 million.  From an outsiders perspective, it may seem absurd that someone with a net worth of $10 million+ could be entitled to many more millions of dollars, but under typical circumstances (i.e. when the numbers aren’t staggeringly high) entitlement to half of the difference of each parties’ Net Family Property seems more “fair.”

For Ms. Klum’s sake, let’s hope that pre-nuptial agreement does in fact exist.

By the state law of California, where the unhappy couple filed for “no fault” divorce, Brand could be entitled to half of Katy’s fortune.

Unfortunately for Ms. Perry – one of the world’s biggest musical artists – the duo did not enter into any form of pre-nuptial agreement, and her less famous, but still relatively rich soon-to-be-ex, stands to gain up to $40 million in a lump sum, 50/50 settlement.  This is all according to the Daily Star, a British entertainment news source. We all make mistakes, but $40M is a pretty big mistake.

It was kind of a somber way to spend the holiday season, but Mr. Brand and Ms. Perry spent Christmas thousands of miles apart, as Katy made her way to Hawaii while Mr. Brand was back home in England.  According to TMZ.com, the source of the sourness between this celebrity couple was Ms. Perry’s desire to party and Mr. Brand’s more laid back idea of weekend entertainment.

In spite of that, there is apparently no ill will between the parties and they both agreed that filing for divorce was the right move.

There are rumours swirling to the contrary, however, some even suggesting that Mr. Brand “blind-sided” Ms. Perry with the divorce because he was the one who filed the papers.  TMZ.com has since reported that Mr. Brand did the filing because Ms. Perry was afraid that initiating the proceedings on her own would upset her staunchly religious parents.

The most-talked about issue surrounding this separation is the potentially large payout that Mr. Brand may receive.  For a marriage of such short duration, it seems ludicrous that an already wealthy person would be entitled to half of the couple’s combined fortune.

A few weeks ago, I wrote about Jennifer Lopez and Marc Anthony and how equalizing net family property works in Ontario.  The same formula and procedure may apply to Russell Brand and Katy Perry; however there is a mechanism in place to protect Ms. Perry from having to make a gargantuan equalization payment.

Section 5(6)(e) of the Family Law Act reads as follows:

Variation of share

The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to,

(e) the fact that the amount a spouse would otherwise receive under subsection (1), (2) or (3) is disproportionately large in relation to a period of cohabitation that is less than five years.

The laws of California may not contain a similar clause, but given the extremely short duration of their marriage and imagining for a minute that Mr. Brand and Ms. Perry were residents of Ontario, a judge has the discretion to decide that giving Mr. Brand upwards of $40 million would be unconscionable.

Hopefully, this information puts all the extremely wealthy engaged people out there at ease.  There are never any guarantees when you walk into a courtroom, but the legislation above would certainly make it difficult for someone in Ontario to get a divorce within the first five years of their marriage and secure a half interest in the assets of their spouse, wealthy or otherwise.

According to the Times of India (I read a lot) Lopez and Anthony, who separated back in July after seven years of marriage are working towards negotiating a settlement before filing for divorce. There’s a lot at stake, but if you have the time and patience (and if you can stand to be in the same room as the person you are separating from) then negotiating a resolution in an amicable fashion, without using the Courts, can be mutually advantageous.

In Ontario, particularly in the Central East Region, the Court are very backed up, so separating couples often need to wait months before they can attend their first substantive Court date – which is usually a Case Conference. In the interim, negotiations and settlement meetings are encouraged to help narrow down the issues between the parties. In the event that the parties do end up in Court, in Ontario anyway, judges look favorably on those who make serious attempts to resolve their issues prior to pursuing litigation.

While there are a lot of assets to deal with in their matter, one big hurdle they have climbed is that they have agreed on their date of separation. That makes dealing with the financial aspects of the divorce a lot easier.

In Ontario, divorcing spouses generally equalize their net family property. The net family property calculation, in simple terms, is as follows: take the value of all assets owned by a party as at the date of separation (other than excluded property, for example a gift received from a third party during the marriage); subtract all liabilities as at the date of separation; and subtract your net worth as at the date of marriage (which does not include the value of the matrimonial home). The balance is an individual’s net family property. The spouse with the lower net family property receives half of the difference between each person’s total net family properties.

With J-Lo and Marc Anthony, we are probably looking at some hefty numbers. They own several homes and businesses, and they are also minority owners of the Miami Dolphins, who recently fired coach Tony Sparano.

Sources say once the former couple works out the property and asset division, they will file for divorce in California, because you can file for divorce there without placing any party at fault—the so-called “no fault” divorce. The divorce would be legally finalized six months after they file.

In Ontario, we also have no fault divorce, but it is just referred to using different terminology. In order to finalize a divorce, a couple has to be “living separate and apart for one year.” The difference then becomes the time it takes to finalize the divorce. In Ontario, you must wait a full year after filing an Application for divorce before it is final.

Kim Kardashian filed for divorce citing “irreconcilable differences,” listing the date of separation as October 31, 2011. In addition, Kim Kardashian revealed, according to an article on People.com, that prior to their nuptials, the couple signed a pre-nuptial agreement and that she will not be making any spousal support payments to Kris Humphries.

However, what if a pre-nuptial agreement did not exist and the couple’s property was subject to division and equalization? Moreover, what if the couple resided in Ontario? Are there any laws currently in place that could prohibit Kris Humphries from sharing in the Kardashian Empire?

In Ontario, when one speaks of division of property, Part I of the Family Law Act is looked to and applied using the requisite and necessary definitions and calculations that must be used in order to arrive at a determination of the parties’ respective net family properties and subsequent equalization payments owing. Generally, an equalization payment is one-half the difference of the parties’ net family properties which is then given to the party with the lower net family property.

For ease of reference, “net family property” is defined as the value of all the property that a spouse owns on the date of separation, after deducting the spouse’s debts and other liabilities, and the value of property, other than a matrimonial home that the spouse owned on the date of the marriage, after deducting the spouse’s debts and other liabilities, other than debts or liabilities related directly to the acquisition or significant improvement of a matrimonial home, calculated as of the date of the marriage.

However, there are certain situations where an unequal division of property is warranted. In order to determine whether or not she qualifies for this, and if she were residing in Ontario, Kim Kardashian would need to look to s. 5(6) of the Family Law Act, which gives the court the discretion to award an amount that is more or less than half the difference between the net family properties of the spouses if equalizing would be unconscionable to one of them. How would the court go about making such a determination? They would need to look at the list of factors found under s. 5(6), and in this case, they would look more specifically at s.5(6)(e) which states that they would consider “the fact that the amount a spouse would otherwise receive is disproportionately large in relation to a period of cohabitation that is less than five (5) years.”

Since Kim’s and Kris’ marriage lasted only 72 days, it is possible to assume that if they were Ontario residents, DASH Boutique, Kim Kardashian’s luxurious home in Calabasas, CA, her designer bags, jewels and shoes, etc. could be shielded from equalization, much to the detriment of Kris Humphries who is unemployed and sidelined due to the long-lasting basketball strike going on right now in the NBA.

However, before he jumps into marriage, there are certain things that Lance Bass should consider. Since his days as a teen heartthrob, when he was one of five members of the worldwide sensation known as N’SYNC, Lance has managed to earn a pretty penny and consequently, he should ensure that his hard work and efforts are protected if he ever decides to obtain a divorce.

In Ontario, domestic contracts (included therein is “marriage contract”) are regulated by the Family Law Act. Section 52 deals specifically with marriage contracts and outlines what sorts of provisions would or would not be enforceable. More specifically, section 52 states:

52. (1) Two persons who are married to each other or intend to marry may enter into an agreement in which they agree on their respective rights and obligations under the marriage or on separation, on the annulment or dissolution of the marriage or on death, including,
(a) ownership in or division of property;
(b) support obligations;
(c) the right to direct the education and moral training of their children, but not the right to custody of or access to their children; and
(d) any other matter in the settlement of their affairs.

Rights re matrimonial home excepted
(2) A provision in a marriage contract purporting to limit a spouse’s rights under Part II (Matrimonial Home) is unenforceable.

In addition, section 55(1) of the Family Law Act stipulates that in order for a domestic contract to be valid and binding it must satisfy the following three requirements:

1. it must be made in writing;
2. it must be signed by the parties; and
3. witnessed.

Therefore, a validly executed marriage contract could protect Lance Bass in the following ways (but not limited to the following):

• it could protect his ownership and interest in any property he may own. Meaning that he could exclude it from a Net Family Property calculation so that the value of same would not have to be shared with his spouse, unless the property in question was a matrimonial home;
• it could limit or waive his obligations to support his spouse;
• it could limit his obligations to support any children of the marriage or attach conditions to same; and
• it could determine from the outset the custodial arrangements with regards to any children of the marriage.

In conclusion, Lance has a lot to think about before deciding to get hitched!

If the couple lived in Ontario, this would be done using a separation agreement. A separation agreement allows a couple to settle their issues in a contract, section 54 of the Family Law Act states the things couple can contract to:

54. Two persons who cohabited and are living separate and apart may enter into an agreement in which they agree on their respective rights and obligations, including,
(a) ownership in or division of property;
(b) support obligations;
(c) the right to direct the education and moral training of their children;
(d) the right to custody of and access to their children; and
(e) any other matter in the settlement of their affairs.

Individuals might draft a separation agreement through negotiations, mediation, arbitration or the collaborative family law process. Fighting family law issues in court is an expensive and very long process. Much of the family law system in Ontario is in fact designed to encourage settlement between the parties. Every couple must attend a case conference before a trial or motion in which a judge will canvas the issues and give them information on ways to settle their issues, and there are cost penalties to litigants who ignore reasonable offers to settle and subsequently fail in litigation. Using a separation agreement is usually in the best interest of both parties. Many of those who become embroiled in litigation often wish they could go back in time and avoid the whole mess through a settlement.

If this was to occur in Ontario, the most important thing to determine would be whether the ring was given as an absolute gift or whether it was gift in contemplation of marriage.   When a gift is made absolutely, then it does not have to be returned at the breakdown of the engagement, it was given to the other person to be their property completely.  If, however, the rings was given on condition that the couple get married the courts in Ontario in such cases as Okahai v. Sharify and Marcon v. Cicchelli, have stated that the ring must be returned.  While it may seem unfair, in Ontario, the Marriage Act states that the return of property is not based on whose fault the end of the engagement was:

33. Where one person makes a gift to another in contemplation of or conditional upon their marriage to each other and the marriage fails to take place or is abandoned, the question of whether or not the failure or abandonment was caused by or was the fault of the donor shall not be considered in determining the right of the donor to recover the gift.

Some of the courts in Ontario, such as in Marcon v. Cicchelli seem to have confused this point, and considered that one individual, by causing the breakdown of the engagement, had breached the condition.  This seems to be contrary to the statute, and it is clear in the Marriage Act that the most important question for anyone with an engagement ring; what was the intention behind the gift of the engagement ring.

It’s also important to remember that this framework applies to any gift during an engagement.  A court is going to examine what the intention was behind the gift.  They will look at all of the evidence, and not just rely on what the person claims their intention was, though that would be admissible.  So if things break down for Kim and Kris, all eyes will turn to what precisely what was the understood intention behind that 2 million dollar ring.

What if the parties were in Ontario?

As the parties do not have any children, if the parties were separating in Ontario, the issues which would need to be resolved would be:

1. The Matrimonial Home;
2. Equalization of the parties Net Family Property; and
3. Spousal Support.

The Matrimonial Home

Although there have not been many details released regarding Olivia and Tao’s relationship, it is relatively safe to assume that they shared a home together and as such, this asset will need to be properly addressed as part of a settlement in this matter. Part I of the Family Law Act deals with the Matrimonial Home and protects each spouse’s rights to the home whether or not they have been placed on title. What will be done with the Matrimonial Home, for example whether it will be sold or whether one party will retain the home, is a decision that is the parties must make on their own. The value of the home, and all associated liabilities, will be dealt with as part of the Equalization calculation as will be discussed. For further information on how Matrimonial Homes are typically handled by the Ontario Courts, please visit our website.

Equalization

When a married couple decides to separate, the parties will have to address the issue of what their new financial reality will be like. The process to come to this determination is known is called “Equalization,” and is a calculation which will be completed to determine the amount that the spouse with more assets is obligated to pay the other. Not knowing which spouse in this situation earns more, as Tao is an Italian Prince and filmmaker and Olivia is an actress, or anything about the couple’s assets, it is impossible to say which spouse would be responsible for an equalization payment to the other. For more information on how equalization is calculated, please visit our website.

Spousal Support

There have not been any reports as to whether either party will be seeking spousal support from the other, Ontario Courts would first consider whether the individual was entitled to support. In order to determine this is entitlement the Court would look at such factors as whether he/she is in need of support, or if he/she had made a contribution to the marriage that requires they be compensated for.

Based on the known facts of this case, as Olivia is an actress on “House,” and as Tao is a filmmaker and likely has significant wealth due to the fact that his family is royalty, both parties are likely high income earners. Based on the assumption that they are both making a very good living, it would be difficult to prove that either is in need of support and therefore they would likely not be able to meet the test for entitlement. If the parties could not meet this test, then the spousal support issue would be completed and neither would receive it from the other.

While not married, the couple may be considered to be in a common law relationship.  A common law relationship is when two people live together in a marriage-like relationship.  The two people can be of the same sex or of the opposite sex.  No legal formalities are required.  The period of time two persons must cohabit before being considered to be in a common law relationship depends on whether the issue that needs to be resolved falls within federal or provincial jurisdiction.  Matters that fall within federal jurisdiction include federal government pensions and division of the Canada Pension Plan upon separation.  Property division is determined by provincial law and each province has its own definition of what a common law spouse is.

For Ontario family law purposes, to be considered a common law couple, two persons must cohabit 3 years, or have a child and a relationship of some permanence.

The judiciary considers a number of factors when determining whether a couple falls within the definition of a common law relationship.  Generally, a judge will look at the lifestyle of the parties in a common law relationship. In Ontario, the case Molodowich v. Penttinen (1980) (Ont. Dist.Ct.), sets out the generally accepted characteristics of a conjugal relationship.  Such characteristics include shared shelter, sexual and personal behaviour, services, social activities, economic support and children, as well as the societal perception of the couple.  However, in this decision it was also recognized that these elements may be present in varying degrees and not all are required for the finding of a common law relationship.

Although the details of Mila and Macaulay’s relationship are unknown, assuming the couple is found to be in a common law relationship, certain rights and obligations may arise.

While persons in common law relationships do not have the same property rights as married persons, common law partners are entitled to make claims for unjust enrichment.  Unjust enrichment is general equitable principle that states that no person should be allowed to profit at another’s expense without making restitution for the reasonable value of any property, services, or other benefits that have been unfairly received and retained.  As such, a person in a common law relationship may claim that their common law partner was unjustly enriched by their contributions during the course of the relationship and they must be compensated accordingly.

Despite the differential treatment of married and common law couples with respect to property upon dissolution of the relationship, common law couples have the same entitlement to spousal support as married couples.  That is, if your common law relationship ends, and you do not have the means to sustain yourself, like married persons, you may seek spousal support from your former partner.  The quantum of support can be decided by negotiation, mediation, collaborative law or arbitration.  If the parties are unable to agree to quantum on their own, they may go to the court and ask a judge to make a determination in this regard.

As common law relationships are the fastest growing family structure in Canada, couples in common law relationships should sign a cohabitation agreement to protect their rights.  A cohabitation agreement can outline matters such as financial arrangements, the amount of support payable and who will move out of the couple’s home upon separation.  This agreement cannot, however, make determinations with respect to custody or access.

Again, while it is unclear whether Mila and Macaulay would be considered a common law couple, the above summarizes the issues they may be forced to tackle if found to be common law spouses as their eight year relationship has now come to an end.

If this matter was dealt with in Ontario it would be handled in the same manner as the United States. The Judge would advise Diandra to bring the lawsuit against Michael in the Jurisdiction where the parties Divorced as this would be the most convenient jurisdiction.