Stripping Down Magic Mike’s High-Profile Split
By David Kim, Family Lawyer, Calgary
Celebrity divorces captivate us, providing a tantalizing glimpse into the private lives of the rich and famous as they battle over millions in assets. The publicity surrounding these high-profile splits is often unavoidable, with clickbait headlines sensationalizing the ensuing legal battles. These stories frequently highlight gross injustices and exaggerated tidbits, which can conflate and confuse the true issues at hand. While these dramas are entertaining, they also contribute to misunderstandings about the realities of family law.
One such high-profile divorce is that of Jenna Dewan and Channing Tatum. Both have found success in Hollywood, but Tatum notably thrust his way into the limelight with his explosive performance in the 2012 blockbuster Magic Mike and its saucy sequels. The Magic Mike franchise has become a focal point in their ongoing legal dispute as the former spouses work toward a fair division of their substantial assets.
In this blog, we aim to clarify the realities behind the headlines, examining Tatum and Dewan’s divorce from a legal perspective. We'll delve into key legal principles and consider how this case might unfold if handled under Alberta law, with a focus on the Magic Mike franchise in particular.
Background of the Case
Channing Tatum and Jenna Dewan met in 2006 on the set of the dance film Step Up and married a few years later in 2009. They announced their separation in April of 2018 after almost nine years of marriage.
Their divorce was filed in California, a no-fault jurisdiction where the legal grounds for ending a marriage are typically based on 'irreconcilable differences'. Simply put, this means that the couple can no longer get along, and any further attempts to reconcile would be futile. Unlike fault-based divorces, where blame is assigned to one party, irreconcilable differences focus solely on the breakdown of the marriage.
Canada is also a 'no-fault' divorce jurisdiction. However, the primary grounds for divorce here require that spouses have lived separate and apart for at least one year. While other grounds such as adultery and physical or mental cruelty exist, these are rarely used.
Division of Assets
While 'divorce' is commonly used to describe any aspect of a married couple's separation, in legal terms, it specifically refers to one part of the broader issues that arise when a marriage ends. In high-profile cases like this one, the divorce is the easy part! It is the division of property—assets and debts—where there is often the most conflict.
Tatum and Dewan accumulated substantial assets during their marriage. In California community property laws govern the division of assets, typically requiring an equal split of marital property. This includes income earned, real estate, investments, and other assets acquired by either spouse during the marriage.
If this case were handled in Alberta, the division of property would fall under the Family Property Act (the “FPA”), which operates under a system of equalization. Under the FPA, marital property is not necessarily divided equally but rather in a manner that aims to achieve a fair division.
There are 3 types of property as provided under section 7 of the FPA:
Section 7(2) - Exempt property – This refers to property that does not need to be equally divided between separating parties because it rightfully belongs to only one of them. Examples of exempt property include assets owned by one party before the relationship, gifts from a third party, inheritances, insurance payouts, or tort settlements. For property to remain exempt, it must be traceable to a current asset, meaning it should not be mixed with shared family property. If it becomes intermingled, it may lose part or all of its exempt status.
Section 7(3) - Although the exempt property mentioned above is typically not subject to division, there are exceptions. These include:
- Any increase in value of exempt property during the relationship.
- Property acquired using income generated from exempt property.
- Property gifted from one party to the other.
- Property acquired after the relationship ends.
While these types of property are not automatically divided equally, the court may vary the distribution based on considerations of fairness. Section 8 of the FPA allows the court to take various factors into account, such as the contributions of each party to the household (including as a homemaker or parent), financial contributions toward acquiring or improving assets, the length of the relationship, and whether one party improperly used or wasted assets.
7(4) Property acquired during the relationship – Property acquired by either party during the relationship that does not fall under the exemptions provided above under section 7(2) or 7(3) are presumed to be divided equally. However, if equal division would be unfair, the court may adjust the distribution after considering the factors outlined in section 8 of the FPA, such as each party’s contributions to the household and financial circumstances.
Magic Mike Profits: Division as Family Property Under Alberta Law
Tatum's career-defining project, Magic Mike, began as a semi-autobiographical film about his experience as a male stripper. It has since evolved into a successful franchise including sequels, spin-offs, and intellectual property rights.
As Tatum conceived and co-funded the film, he shared in its profits following its massive success. The original Magic Mike grossed $167 million at the box office from a budget of just $7 million. The 2015 sequel, Magic Mike XXL, which Tatum also starred in and produced, earned $117 million from a budget of $14.8 million. Needless to say, that is a lot of money!
Since the production of Magic Mike began in the summer of 2011, during Tatum and Dewan's marriage, it does not qualify as exempt property under section 7(2). It also does not fall under section 7(3) property. Therefore, it would be considered section 7(4) property, subject to equal division between Tatum and Dewan.
If Tatum's divorce were adjudicated in Alberta, the court would evaluate the contributions of both Tatum and Dewan to the development and success of Magic Mike. Factors such as Dewan’s involvement in the franchise, her support during the marriage, and the financial implications of the asset would influence its division. For Tatum, he would hope that consideration of section 8 factors would lessen the blow, so to speak, arguing that Dewan did not contribute to the project or household. However, it is unlikely that this argument would lead to an unequal division in his favour.
Under California’s community property laws, Tatum will almost certainly have to pay out half of the Magic Mike franchise value to Dewan.
The Trial Over Concealed Profits
So, if the law clearly indicates that Dewan should receive half of the Magic Mike profits, what’s the problem? Why is there still a trial?
It seems that Tatum has shielded, or attempted to hide, a significant portion of his Magic Mike assets through a complex web of holding companies, trusts, and other instruments, in an attempt to make the franchise appear less valuable than it actually is for the purposes of property division. Dewan has reportedly rejected settlement offers from Tatum, believing the true value of the franchise is far greater than has been revealed. Tatum denies this, insisting he has paid out his fair share.
The trial is expected to reveal details about the complete ownership structure of Magic Mike, with Dewan, Tatum, and his business manager scheduled to testify. If there is a discrepancy between Tatum’s declared value and the true value of the franchise, Tatum will be liable to pay the difference to ensure Dewan receives her rightful share.
Channing Tatum and Jenna Dewan’s ongoing divorce serves as a compelling case study of how celebrity divorces play out when substantial assets are at stake. The complexities inherent in high-profile divorces underscore the importance of experienced legal counsel and sensitivity to family dynamics. If you have questions or concerns about your own separation or divorce, our experienced team at Crossroads Law is ready to assist. Contact us today for a free, no-obligation consultation with one of our skilled lawyers.
