Mark Zuckerberg Might Not Need To Worry About A PrenupBy: Zach Walton - May 22, 2012
After last Friday’s debut of the Facebook IPO, Mark Zuckerberg went and got married on Saturday. Now Zuckerberg and his longtime girlfriend, Priscilla Chan, are presumably living in marital bliss. Donald Trump, perhaps being able to see the future, advised Zuckerberg to have Chan sign a prenuptial agreement last week before anybody even knew the marriage was happening. Due to a California law, a prenup may not even be required.
When the news broke of the marriage last weekend, everybody started talking about a prenup. It makes sense, right? In case the two ever split up, Chan could get a sizable chunk of Zuckerberg’s $17 billion. Signing a prenup would set how much she could get out of him if a divorce were ever to occur. Zuckerberg may have planned all of this ahead and married Chan after the IPO to take advantage of community property laws.
The New York Times reports that California is one of the few states that has such a law on the books. It states that whatever was the property of a person before a marriage remains in their possession even after a divorce. Essentially, the $17 billion that Zuckerberg earned on Friday will remain his.
Of course, community property laws change once you do get married. Starting yesterday, whatever Zuckerberg or Chan earn will be owned by both of them as per the law. During a divorce, those possessions would be split up between the two parties.
Speaking to the New York Times, Chris Donelly, head of the family law department at Leland, Parachini, Steinberg, Matzger & Melnick in San Francisco, said that things get much more complicated though when it comes to value growth. If the Facebook stock ever starts to become really valuable, Zuckerberg’s current value will increase alongside his shares. That increased value happened after the marriage, but the shares were there before the marriage. What happens then?
Donelly says that the growth of the shares may go to the community. While it’s a big gray area, he says that Chan would be entitled to something in divorce proceedings. She wouldn’t be able to gain access to any shares since they belong to Zuckerberg as they were his before the marriage, but she would be entitled to something.
This is all speculation at the moment. The Zuckerbergs are remaining tight lipped on whether or not they signed a prenuptial agreement. Even with California’s community property law, a prenup would still be a good idea. It’s obvious that both Zuckerbergs, one the head of Facebook and the other a doctor, will be making quite a bit of money in their lifetime. During their marriage, that money belongs to both of them. The prenup would help settle who owns what before it turned into something nasty if a divorce were to take place.
Regardless, a prenup shouldn’t be the most pressing matter on the newlywed couple’s minds. They have much bigger issues to contend with, like getting Facebook shares above $34. It seems that people still want to hear details on a prenup, however, so do you think they signed one? It would be interesting to see the details of any potential prenup between the two, that’s for sure.