Celebrity Break Ups Highlight Potential Financial Disasters in Divorce

Posted By Hollingsworth & Zivitz Attorneys at Law || 6-Sep-2017

Chris Pratt and Anna Faris’ recent announcement to separate after 8 years of marriage raises the potential financial disaster they, and similar high-income earning couples could face when separating without a pre-nuptial agreement. While it’s unclear whether the couple had a prenuptial agreement, Pratt is one of Hollywood’s highest paid actors and Faris reportedly makes $125,000 off each episode of her sitcom, “Mom,” which currently just wrapped its’ 5th season.

Indiana Law Presumes an Equal 50/50 Split

While the couple is based out of Los Angeles, California, and divorce laws vary by state, Indiana law presumes an equal division of assets. If the couple were to divorce in Indiana, without a pre-nuptial agreement in place, the courts would consider all their assets and all their liabilities and presume they should be divided in half. Indiana takes the “one pot” approach, which means everything gets thrown in—even property that was brought into the marriage or property that is titled in one party’s name only.

Keep in mind, though, this is a presumption and when appropriate evidence is submitted to rebut that presumption, the courts can divide a marital estate in a manner they deem just and reasonable. Pratt earned roughly $26 million in 2016 alone, which is a hefty sum to divide in half. If he hopes to keep more than half of those earnings for himself, the burden would rest with him to prove to an Indiana court why a portion should be kept separate.

Arguing Against the Presumption

Here’s a look at a few factors an Indiana court can consider when deciding whether to divide property in an unequal manner:

  • The contribution, financial or otherwise, each spouse made in acquiring the property,
  • Whether the property was acquired before the marriage or through inheritance or gift,
  • The economic circumstances of each spouse at the time property is divided,
  • The conduct of either party as it relates to dissipation of their property, and/or
  • The earnings and earning ability of each party.

Even though Indiana law says a party can rebut the presumption of an equal division, a party similarly in Pratt’s situation could have a hard time arguing in an Indiana court that his wife shouldn’t receive an equal share of that $26 million. Here’s a few potential reasons why:

  • Faris’ sitcom is recorded out of Warner Brother’s studio in Los Angeles, the couple’s home base. If Pratt spent significant time away from home recording movies, and if the same issues were before an Indiana court, Faris could argue she made equal contributions to the marital estate. An Indiana court could consider Faris’ own financial contributions, but also whether she stayed home taking care of the marital residence and the couple’s son while Pratt was away, which inevitably played a role in his ability to be part of those big box-office hits.
  • While Pratt is reportedly the higher earner, Faris was the more notable celebrity at the time of the marriage, which means she could have easily brought more earnings into the marriage at the outset.
  • Faris’ earnings are certainly no chump change, but the significant difference between their income could factor in towards an unequal division of property in Faris’ favor.

Even despite all these arguments, the more a couple’s funds were commingled, the harder it gets for a court to parse out and these arguments to separate financials begins to weaken. Prenuptial agreements are an easy way for high-earning couples to bypass these types of financial and property disputes that inevitably arise during a divorce and give parties greater flexibility to make their own decisions about what happens to their own property.

At Hollingsworth & Zivitz, P.C., our team has the experience, the understanding, and the compassion to assist with your family law needs. If you have questions or concerns regarding prenuptial agreements, divorce, custody, mediation, collaborative law or any other family law concerns, please contact our firm at 317.DIVORCE.

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