The Worst Divorce Settlements in History—and How to Avoid One of Your Own
The person who first said, “A good compromise is one from which neither party walks away happy”? was probably a divorce lawyer.
By Lauren Cahn
First, let’s face it: It’s never a win-win
Compromise is crucial to any good relationship, and generally speaking, the ideal result is both parties feel they’ve won, according to the American Management Association. But when you’re unwinding a relationship—as in a divorce—it’s pretty rare for anyone to walk away feeling victorious. “Apart from the emotional toll a divorce exacts upon the once-hopeful couple, there’s simply no way to split things up in a way that doesn’t engender at least some level of regret and resentment,” explains matrimonial attorney Rebecca Zung.
Sometimes it seems fine, until it’s not
“I know of divorce settlements where one spouse ended up with all of the investment funds, and the other ended up with all other assets (real property, bank accounts, etc.), and everything seemed fine… right until Bernie Madoff got arrested,” Georgia matrimonial attorney, Randall Kessler tells Reader’s Digest. “We all know how that ended up.” The more the investment-minded spouse had trusted Madoff, the worse the settlement became for that spouse.
“No trash talking” clause
Before uber-celebrity Jennifer Lopez could marry singer Marc Anthony, Anthony had to divorce his then-wife Dayonara Torres, and it appears that JLo took a serious interest in how that divorce settlement went down, according to Legal Zoom, which reports that the settlement included a clause forbidding Torres from speaking ill of JLo (at the risk of lawsuit and the payment of damages).
She lost her head
The most celebrated divorce in history, according to Smithsonian.org, is that of King Henry VIII versus…Pope Clement VII? It’s the Pope who Henry had to fight when he wanted to end his first marriage so that he could marry the younger, prettier Anne Boleyn. And it’s a fight that ended poorly for everyone. To marry Anne, Henry quit the church. Quitting the church quickly caused England’s way of life to unravel, for which the English blamed Anne. Within three years, Henry had grown disenchanted with Anne and had her beheaded.
William O. Douglas sat on the U.S. Supreme Court for more than 35 years (1939 to 1975), so you’d think he’d know better, but in 1954, his divorce settlement with his first wife included a clause whereby the more money Douglas made from writing books and giving lectures, the more he had to pay his ex in alimony. As Legal Zoom puts it, Justice Douglas was essentially on a “financial treadmill” for the rest of his ex-wife’s life (she never remarried).
Snopes had to step in regarding apocryphal stories that singer Marvin Gaye agreed to pay his ex, Anna, all royalties from his next album (Here, My Dear), including: Anna got screwed because Marvin didn’t give the album his best effort. Marvin got screwed because the album was a hit.
Neither is true. Marvin owed Anna a specific amount regardless of the album’s success. Although Marvin initially considered torpedoing the album, he ended up creating a record critics loved.
It could happen to you
All you need to win the lottery is a dollar and a dream, they say. And all you need to lose your winnings is to try to hide them from your spouse. That’s what The LA Times reports happened after Denise Rossi won $1.3 million in the California Lottery but decided she wanted it all for herself. Days later, she filed for divorce from her husband but didn’t mention the lottery winnings. When the truth caught up with her, the court ruled very penny of her winnings would go to Thomas.
Some people are just asking for trouble
Attorney Zung tells Reader’s Digest that the worst settlements she’s seen are the ones where people have been married a short time, there’s a great disparity between their incomes or net worth, and there’s no prenuptial agreement. “For example, a wealthy guy married a cashier. They were married only a year when he placed her name on the deed to their multi-million dollar home. When she left him, the court ruled that the home had been ‘gifted’ to her.”
Sometimes the law just fails to provide a reasonable result
In Nelson v. Nelson, attorney Zung fought hard for her client, a wealthy, older man who’d married his young massage therapist. Over their five-year marriage, the husband was generous, and the wife cooperated in her husband’s estate planning, including forming a trust in her name to own one of his real estate holdings. In the divorce, however, the court applied trusts and estates laws to find that the real estate was no longer “marital property.”
When smart people make stupid choices
Nobel laureates may be among the smartest people on the planet. But even they make questionable settlement choices. In 1988, Robert Lucas agreed to give his ex-wife half of the funds from any Nobel prize he might win in the future…with an expiration date of 1995. Turned out, that was the year Lucas picked up the prize. At least he’s in good company: All of Albert Einstein’s prize money from his 1921 Nobel win went to his ex-wife, Mileva Maric.
Maybe it’s wasn’t worth the aggravation
When Prince Charles and Princess Diana divorced in 1996, there was lots of stuff to divvy up and a financial settlement that placed $22.5 million in Diana’s hands. But what no one could ever really get their head around was why Diana was willing to forgo her right to be called “Her Royal Highness.” She lost a variety of honorary military titles as well. Royal experts called the scenario unprecedented.
Worst case scenarios
“The worst divorce settlements are where the children are used as pawns,” April Masini, relationship expert and advisor on Relationship Advice Forum, tells Reader’s Digest. Other worst case scenarios include: (1) One spouse is in school, and the marriage ends soon after graduation: The spouses are equally on the hook for any student loans, but arguably, the graduating spouse has no duty to share future earnings. (2) When the marriage ends after unsuccessful fertility treatments: Viable embryos are “fertile ground,” as Masini puts it, for a custody battle.
Tips to protect yourself from a bad divorce settlement
Legal and financial analyst Jeff White of FitSmallBusiness.com had this advice for protecting yourself from reaching a regrettable divorce settlement:
- Document everything: Make sure you document your financial resources, and those of your spouse, from before your marriage.
- Tax consequences: Not all assets are created equal, even if their technical values are. Some assets will be taxed more heavily than others if you decide to sell, which means you’re actually getting less in your pocket.
- Everything is negotiable: Don’t overlook any asset. Even if you don’t want it, you can use it as a bargaining chip for something else.
This article originally appeared on Reader’s Digest.