Persistent gossip around the power couple proves that there’s always time to plan for the worst-case scenario. It’s not a romance killer. It’s reality.
Once again “sources close to” Ellen DeGeneres and Portia De Rossi say they’re on the verge of breaking up after 15 years together and a decade of marriage.
It’s basically business as usual. They’re an enormously aspirational couple: attractive, dynamic, extremely wealthy after years in Hollywood.
People in their circles tend to get jealous enough to at least unconsciously nudge them apart.
However, every time the gossip flares, their team makes it go away and year after year, they stay together.
I hope it’s love. Maybe it’s just common sense. After all, there’s no coherent narrative on what happens to the assets if they split up.
And in that scenario, it’s probably cheaper to remain legally bonded. But even if there’s no plan yet, it’s never too late.
A contract is a contract
Over the years the rumor mill has focused on the lack of a prenuptial contract that lays out who gets what if the relationship fails.
That aligns with Ellen’s personal brand of promoting enthusiasm over planning. People like it when she leaps into things and doesn’t count the cost until much later.
But when she married De Rossi in 2008, she was a decade younger and maybe worth $65 million.
De Rossi had about $20 million in real estate and cash saved up from her TV roles. It was a relatively equal match, give or take eight digits and a mansion or two.
They came in with roughly equivalent wealth and in California they would have split it down the middle. No win, no loss either way.
Now, however, De Rossi hasn’t been as active while Ellen’s career has become a juggernaut. Oprah isn’t around any more to get in her way.
And the deals Ellen signed only get better the longer she goes. She gets 60% of all profit on her show. Year after year, that’s rolled into about $35 million a year.
Add the usual production and endorsement income and she now banks every 12 months what the couple was worth when they legalized their relationship.
That’s exponential success. Some people claim it’s translated into $430 million in wealth that Ellen has banked in her career, compared to once again maybe $20 million on Portia’s side.
While that number is probably inflated (the estimates usually mistake “lifetime earnings” for “accumulated wealth”), it’s a demonstration of how the power dynamic changes.
Both women are still wildly successful by any usual standard. But Ellen’s earning power turns just about everything else into a rounding error.
Out of a notional $450 million in lifetime earnings, maybe 5% came from De Rossi paychecks. The imbalance is clear. The lawyers should be involved.
After all, you can only sign a prenuptial contract splitting the assets before you get married. However, postnuptial contracts exist as well to cover the way life changes the initial assumptions around a relationship.
It’s not anti-romantic. It’s common sense.
Changing the terms
If for some reason the couple splits now, a fight could be extremely destructive and extremely expensive.
De Rossi might have worked for $20 million and be entitled under California divorce law to up to ten times that settlement.
Ellen’s career is wrapped up in that $200 million. It represents illiquid interests in her production companies and the houses she loves to buy.
She can’t simply liquidate half her company and hand over the money without seriously diluting her creative control over the show.
And while she can attach De Rossi as a passive partner in future income streams, that’s probably not going to fly. Divorce settlements are all about lump sums and clean splits.
Keep embittered spouses together for the sake of the business and you’d might as well stay married.
For all we know, that’s what’s been going on here for years. Either way, a contested divorce would motivate savage and destructive legal maneuvers.
From an advisory point of view, it’s simple math. If De Rossi can raise her payout to $22 million, she can spend $1.9 million and come out ahead.
Neither spouse ends up with that money. It goes to the lawyers, gone.
As the gap widens, the incentive to hand lawyers vast sums in exchange for an incrementally better split grows.
Ellen doesn’t want that. A suitably motivated spouse wouldn’t care.
It’s an old story. Where we have anything like clarity on their relationship revolves around their willingness to change the parameters when they stop working.
There’s supposedly no prenup in place but there is apparently a postnuptial arrangement that spells out duties, vacation time and budgets.
It’s just like the rules that govern any mature relationship only with a little more legal bite.
If the deal doesn’t include rules for splitting the assets, it needs to be revisited. Otherwise, the only ones who’ll get rich here if they break up are the lawyers.