Millionaire’s handbook: How to divorce a millionaire

There isn’t much that can boost your bottom line quicker than marrying a millionaire — except divorcing one.

Just ask Heather Mills. In March, the ex-model walked away from her brief marriage to Paul McCartney £24.3 million ($48.7 million) richer. While the sentimental may shed a tear over the failure of the marriage, Mills, 40, seemed pretty pleased with the outcome of her split from the 66-year-old former Beatle. “I’m so glad it’s over,” she told the press. “It was an incredible result in the end to secure mine and my daughter’s future and that of all the charities that I obviously plan on helping.”

No matter what you may think of the publicity loving Mills, you have to give her credit for her financial acumen. She made more from her four-year marriage than most CEOs dream of earning in a lifetime.

Mills’s windfall got us thinking. Let’s just say — and this is purely hypothetical, of course — that you’re married to a nice but staid multimillionaire who is beginning to bore you. How would you plan things to make sure you get the largest possible whack of money out of your divorce?

We’re not, of course, suggesting that you break up your marriage for the sake of a big payday. And it’s certainly not our intention to leave the wealthier half of an unhappy couple without the benefit of some good financial advice. The point is that if you want to avoid becoming a Paul (or Pauline), you have to learn to think like a Heather. So, to help us learn how someone can extract the most from a divorce, we enlisted the help of several of Canada’s leading divorce experts. Here’s what they told us.

Leave your emotions at the door Divorce court is not the place to go for therapy or revenge. Insisting that your spouse’s affair go on the record may give you the temporary satisfaction of smearing his or her public image and win you some sympathy with the neighbors. But under the no-fault terms of Canada’s Divorce Act, proving that your spouse cheated doesn’t entitle you to a bigger settlement.

You’ll get better results with claims of the “I gave up my career for you” variety, provided you can prove that the 12 years you spent keeping house actually helped your spouse finish grad school or climb the corporate ladder. But remember that divorce court is primarily about money, not emotions. Which leads us to our next point…

Do your paperwork In divorce court, knowledge is power. If you don’t know how much your spouse makes or what properties she owns, you might wind up settling for less. So your first job should be to compile a complete picture of how much wealth your spouse possesses and owes and where she’s keeping it.

Erika Penner, a certified financial planner in Vancouver, says even happily married couples should stay up to date on each other’s finances by insisting on a detailed rundown at least once a year. And, she adds, if you’re growing tired of your marriage or you sense that your spouse is, you should “start paying more attention and start keeping records.” Once divorce proceedings have started, you may not be able to lay hands on important financial documents, such as proof of stock ownership or recent statements of net worth, that you will need to plead your case.

Seek a pro’s opinion “Don’t just storm out the door and say, ‘I’m gonna see a lawyer.’ Go see a lawyer and then decide whether you want to storm out the door,” advises Michael Cochrane, a lawyer and author of the book Surviving Your Divorce: A Guide to Canadian Family Law.

According to Cochrane, a good divorce lawyer will need only a 45-minute consultation to tell you how your case will probably turn out, including who will get custody of the kids, how the property will be split, and who will pay what. For example, it’s more than likely that if you walk out first, you’ll lose possession of the house.

Cochrane recalls a client who wanted to divorce his stay-at-home wife, who had been out of the workforce for a number of years raising their kids. The client was shocked to learn that his wife would be entitled to sizeable support payments, perhaps indefinitely. She would also get half of not just the family assets, but his personal stock portfolio and other assets as well.

The man decided to stick out his marriage for a while longer — but with an eye to leveling the financial playing field. He spent more time raising his children and encouraged his wife to go back to work. Meanwhile, he kept personal assets that would be considered exempt from property division in court (like inheritance money) out of the family pot. When he finally did file for divorce a few years later, the financial settlement was a lot less punishing to him.

Budget for the break-up It’s a good idea to decide early on how much you can afford to spend on your divorce. While your angry side may tell you to hire a hotshot lawyer whose motto is “nail the son-of-a-gun to the wall,” the reality may be that you can’t afford to keep paying your lawyer’s bills if your divorce drags on. Every motion, argument and phone call your lawyer makes on your behalf results in an invoice, and a litigated breakup will probably cost $40,000 to $100,000, estimates Debbie Hartzman, a certified financial planner in Kingston, Ont., who specializes in financial planning for divorce.

To save time and money, many affluent couples are choosing to have their divorces settled through arbitration. They agree to have a retired judge or retired lawyer hear their case and make a binding decision on who gets what. Depending on the size of the estate, arbitration costs about $15,000 — much less than a court divorce. It’s faster too. Instead of waiting for months to get a court date, several of the divorcing couples that Hartzman steered into arbitration have settled in just six weeks.

Whether you choose arbitration or litigation, investing in the services of a certified divorce financial analyst like Hartzman can help trimyour legal bill. These professionals typically charge $150 to $250 an hour and are part of a small but growing specialty. (You can search online for a CDFA at www.institutedfa.com.) “Some clients are much better off having somebody like that to do organization and financial records than paying a lawyer $450 an hour to do it,” says Cochrane, the lawyer. “Plus, we hate doing it.”

Plan your defence So what happens if you’re a Paul (or Pauline) and you fear that the person you’re about to marry may one day take you to the cleaners? Think prenup.

A prenup is a legal contract you sign before your marriage that lays out how the assets you own individually and together should be divvied up if you ever divorce. Once drawn up by a lawyer, a prenup acts “like an insurance policy,” says Patricia Lovett-Reid, senior vice-president at TD Waterhouse Canada. “It’s best if never used, but it’s invaluable if you need it.”

By all reports, Heather Mills’s ex did not ask her to sign a prenup. A great break for her, but a big mistake for Paul, according to our experts.

If you’re already married and didn’t think to get a prenup, all is not lost. You can still lay out the financial ground rules of your marriage in a document called a “marriage contract” or, in the case of unmarried couples, a “cohabitation agreement.” Just be aware, says Lovett-Reid, that it may be more difficult to get your spouse’s buy-in after the wedding than it would have been before. But simply raising the topic with your spouse may give you some important clues as to the state of your relationship. Paul, Heather, are you taking notes? m