Do Prenuptual Agreements and Forum Shopping Pay Off? What Can Be Learned From The Breakup of Katie Holms and Tom Cruise

The shorthand answer to that question is that with careful planning, a divorcing couple can Kattie, Tom, Suriavoid a long drawn out court battle.  They can resolve the major issues within a matter of weeks, thus avoiding the stress and expense that is inherent in most dissolution cases.

First, Tom and Katie had a prenuptial agreement regarding their finances, in the event that they ever split up. Therefore, they avoided a long drawn out court battle over division of property and assets. Katie gets $15 million does. That is $3 million for each year that the couple was married.

A prenuptial agreement is a tool used by wealthy people or people with assets. It gives them the ability to alter the normal rules regarding spousal support and community property in the event of divorce. It is a contract between engaged people that takes effect when they get married.

Since the parties financial situation may change during the course of their marriage, it is not always possible to predict, in advance, whether or not a prenuptial agreement will be legally enforceable when the parties separate or divorce. That is why it is important to hired skilled legal counsel when entering into a prenuptial agreement, to ensure that you have adequately complied with all of the legal requirements. While the cost of drafting a prenuptial agreement may be costly, it is far more cost efficient than not having one, and having to litigate property issues when the parties divorce.

A prenuptial agreement cannot include issues regarding child custody and child support. However, Katie was able to get control of the child custody issue by careful planning. First, she moved with her daughter to their home in New York. She stayed in New York long enough to make sure she met the “residency” requirement. She changed her cell phone number and fired all of their New York staff. (She probably did this to get away from the influence of the church of Scientology). She then filed for divorce in New York, rather than California. In New York, there is a presumption of sole custody. While in California, there is a presumption of joint custody. Also, in New York, judges are more likely to listen to arguments regarding the influence of fringe religions, such as Scientology, on children. I am also told that New York is a little more sensitive to mothers who are filing for sole custody.

Thus, by carefully planning this out, and making sure that she met the residency requirements to file for divorce in New York, Katie was able to select a jurisdiction, where the law is more favorable to her position.  In the end, Tom Cruise agreed that Katie would have primary physical custody of their daughter,  Suri, while he would have regular and meaningful ‘visitation’ rights. The distinction between joint physical custody and visitation is important when dividing up parental rights and responsibilities.  Katie also has exclusive say over the choice of her daughter’s religion and education. She enrolled her daughter into a private catholic school. Had this matter been decided in California, they probably would have had joint legal custody. That means that Tom would have had equal say in his daughter’s education and religion.  The parties could have very likely been back in court battling over these issues long after the divorce was final.

As to the issue of child support, in California, that is done by guideline. It is based on the time that each party spends with the child, and the respective incomes of both parties. In any event, I doubt if child support was an issue of contention for Tom and Katie. I cannot imagine Tom Cruise refusing to pay child support, or arguing about the amount. He probably does want his daughter to be financially secure.

So the moral of the story, or the lesson to be learned from the split of Tom and Katie, is that with careful planning, parties can resolve major issues of finances, property division and child custody and support within a matter of weeks, if not days. (Tom and Katie settled most of these issues within 11 days after she filed for divorce)! Thus, they can avoid the stress and expense of what otherwise could have been a long and drawn out court battle.