In March, 2008 the English Court announced its decision after a contested trial. The Court valued McCartney’s holdings at $800 million, and awarded Heather Mills $33 million from Paul to go with the $15.6 million already under Heather’s control.
The Court found that Heather’s need for income was $1.2 million per year, and capitalized that to arrive at a $28 million lump sum figure, and then awarded her and additional $5 million to buy a house in London. Hence, the total of $33 million.
Child support was set at around $6000 a month plus schooling and a nanny.
This article opines what would have happened had the case been in Texas.
1.1 Under Texas, she would have gotten more. Under Texas law, unlike English law or California law the marriage continues to the date of divorce, instead of ending on the date of filing for divorce. This means that property continues to be accumulated and income continues to be recognized as community income to be divided, even if the income was from Paul’s separate or premarital property. In Texas, separate property cannot be awarded to the other spouse. But the income can be.
The date of valuation of assets in Texas is as close to the date of trial as possible. England, as in California, the marriage accumulation stops at the date of filing so all Paul’s post-2006 income and accumulation of assets was his and not shared with her. I would expect that 50 % of the income during the marriage that is left over or was reinvested now greatly exceeds the $48 million she was awarded. And that doesn’t even take into account property acquired during the marriage.
2.1 The problem in being “in love,” most pointedly an older man with a trophy model, (or older woman with a gym trainer-type) is that they think with their heart instead of their brain. Their heart tells them this time “This is true love,” and their beloved loves them for them only and are not after their money and that it will last forever. Well, at least half of marriages end in a divorce that could be made a lot simpler with a premarital agreement. In a premarital agreement, the parties will, in advance of their wedding, agree on the terms on what should happen in the unwanted event of a divorce. While terribly anti-romantical doing “the business deal” of the marriage in advance, a premarital generally prevents a lot of problems and expense on attorneys figuring out that business deal at the time of the divorce. They are especially appropriate for second marriages or a marriage of convenience (i.e. two retired widow.widower types)
2.2 In the McCartney case, a premarital agreement could have stated what spousal support she was to receive and what take in property she would receive. The court in McCartney’s case evidently decided to lump sum alimony payments to her in the sum of $28 million instead of having them paid at the rate of $1.2 million for life. A premarital agreement probably would have given her less. See this website article on premarital agreements.
3.1 According to news reports, Heather is the spouse who did not take the high road and made a public spectacle of the case. She is the one who got tagged with being greedy (asking for $250 million) and therefore probably set in motion a cascade of presumptions and the court’s resolving of issues against her. The court opinion scorched here. Anyway, an annuity purchased today would pay her $210,000 per month for the next fifty years based on a 6% interest factor. How much money does one need?
4.1 Heather fired her lawyers, even though she had $16 million in assets under her control to continue to pay them. They withdrew, probably not because of nonpayment but because she was acting goofy. Heather most likely got hammered on the technical side of the case. The court evidently bought into Paul’s presentation of the value of his estate of $800 million, not the $1.60 billion she alleged. Because she is not a lawyer, she was probably not able to get in any evidence of value, and probably did not put on sufficient evidence to allow the court to grant her much relief.
4.2 Although there is a clear cost and expense of hiring a lawyer to represent you in cases, there is most of the time a greater cost in the likely outcome when you don’t present evidence in a proper form that would ever allow the court to grant the relief you want. And your lawyer could warn you not to request relief that the judge would likely believe is clearly unreasonable and disfavor your entire view of the case. The Judge absolutely disparaged her case presentment, calling her everything but a liar and a fraud.
5.1 Nothing irritates and upsets judges more than a spouse pursuing a “scorched earth” policy whether it be through family violence or threats to tell all to tabloids. This feeling is magnified in a judge’s eye when children are involved. How can it help the child when allegations about either parent’s activities are made public?
5.2 In Texas, however, the court cannot give the parents joint custody of the children if there is a finding of family violence in the two year period prior to filing the divorce or occurring after the divorce is filed, so sometimes by law there needs to be testimony of such violence. That would lead the court either to find that there was such a pattern of violence or there was not. Sometimes the record of such a hearing is sealed.
6.1 They say that rich people are different? Well, yes and no. Yes, they are different because they have private planes and yachts and multiple houses. No, because they hate paying taxes as much as the rest of us. One way that rich people avoid paying taxes is to create foundations or make endowments for charities so that it reduces either their annual income tax or their expected estate taxes due at their death by giving away a portion of their estate. The right to direct such contributions to charity many times is viewed as an entitlement owned by the spouse, just like use of the corporate jet. One who feels entitled to such is not easily parted from same by reason.
7.1 Speculation was rampant in the press that Paul McCartney’s net worth was at $1.6 billion. Heather apparently was unable to persuade the judge of such a value. McCartney’s lawyers obviously did an excellent job of presenting value from their perspective, likely presenting discounts from enterprise value for lack of marketability and minority discount, which are commonly used by business valuators in valuing business interests.
7.2 In Texas cases, valuation of assets is extremely important, but not as critical as states such as California. California is a mandatory 50/50 division of community property state, whereas Texas is a just and right division, which means that the court can deviate from a 50/50. In other words, if a court feels that a husband’s car is worth $17,000 and the wife’s car is worth $19,000, the court could award the cars to each of them as a just and right division, instead of having to make some kind of offset out of other assets, as must be done in California.
7.3 Once again, in the McCartney case, by Heather not presenting competent evidence of compelling value, she failed to convince the court to award her more property.
8.1 The English court capitalized a need-based prospective alimony award of $100,000 per month for her life in the lump sum of $28 million and awarded her another $5 million to purchase a London residence. This $33 million is about 4.1% of the adjudicated value of Paul’s estate of $800 million (the rest of the award in the press holdings of around $50 million came from property already in Heather’s possession of about $16 million). If the value of the McCartney estate truly was found by the court was low, obviously the hit on Paul’s assets (if truly worth more) is dramatically less than 4%. So the financial effect on Paul is de minimus, but Heather’s net worth tripled. Ah, the difference in perceptions.
9.1 The English court ordered child support of $6,000 a month plus Paul is to pay for nanny and private school. This certainly is a pittance of his income, but seems like a king’s ransom to most people. In Texas, awards this high are rare, because there is the reality that at some point how much money does it take to pay for a child’s needs and there ceases to be a mechanical relationship to either party’s income. The presumptive guideline for support for Paul McCartney’s child in Texas would be $1,500, but Heather could clearly make a case that necessities of the children were much higher and that obviously Paul had the ability to pay. It is silly for people with so much wealth to be arguing about such banal matters; maybe that is one reason why Heather’s attorneys withdrew from representation. See this website’s article on Texas child support.
10.1 This is for those who believe in the concept of Golddiggers. For the uninitiated, a Golddigger is defined as a prospective spouse, while may having true affection for the new prospective spouse, keeps a very keen and cold eye on the financial gain that could be had not only during the marriage, but at the end of the marriage. Heather adamantly denied being a Golddigger.
10.2 So under this standard, Heather gets the paycheck tax-free at the end of the marriage of $8 million per year for each year she spent married to McCartney in addition to the $15 million or so that she accumulated through him during the marriage or received prior to the marriage. Another way of looking at it is that Heather gets a daily paycheck of somewhere between $34,000 and $48,000 for every day of her marriage to Paul. Not bad. So she got far less than what she though was reasonable, but did receive an amount to easily make the top 10 list–by trial or settlement–of takes in a short marriage divorce.
This article is partially based upon an interview of Ken Raggio on KRLD Radio 1080 on March 17, 2008