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Consider a Pre-Nup Before Changing Status to “Married”

There aren’t too many people who can say within one week:

  • I turned 28
  • My net worth grew to about $20 billion
  • I got married

Those seem to be lofty enough goals for a lifetime, but Mark Zuckerberg checked off all three last week, with the biggest surprise perhaps being the marriage to his sweetheart, Priscilla Chan. For most individuals, the fiancé who engages a future doctor is considered “marrying up,” but in this case, it looks like Mark is going to have the bulk of the wealth brought into this union.

After the dust settled on Friday with Facebook’s IPO debut, the new buzz surrounding the social media giant was its boss’ surprise nuptials. As with any wedding of wealth, the first apparent question is “Did they sign a prenup?”

Traditionally, prenuptial agreements between engaged parties were put in place to protect children born of a previous marriage. Given a divorce rate in the US is typically quoted to exceed 40%, more individuals with wealth entering into their first marriage are considering a prenuptial agreement as a way to protect assets. Prenuptial agreements, similar to an employer’s non-compete agreement, can typically only go so far with regard to enforcement.

In order for a prenuptial agreement to be considered enforceable in court, typically the following requirements must be fulfilled (but rules do vary by state):

  • The agreement must be in writing
  • Both parties must accept the agreement voluntarily
  • The agreement cannot be unconscionable (unfair)
  • Full and fair disclosure must exist
  • The agreement must be executed and acknowledged by both parties before a witness

Logically, the agreement also needs to be executed prior to marriage (otherwise it would be deemed “postnuptial”). Most agreements will provide guidance on assets owned individually prior to the marriage, and how those assets would be distributed upon divorce. In the case of Zuckerberg’s wealth, he would be subject to California law. As a community property state, he may be able to exclude his current Facebook stock from his marital assets, but if the company were to grow, the appreciation would most likely be included in the assets of the marriage.

So for those of us with a net worth slightly south of $20 billion… is a prenuptial agreement worth considering? Perhaps. The best way to make that determination is to have a conversation with your fiancé about finances and all of the goals that go along with those funds. Talking to a divorce attorney about a prenuptial agreement may also save you time and money down the road (as opposed to talking to a divorce attorney AFTER being served with divorce papers.) While it is a difficult conversation to have, it is an important one to initiate after you have “liked” someone enough to pop the question in the first place.

 

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Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request. This communication is not a substitute for personalized advice from RegentAtlantic. This information is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal advice. Please remember to consult with an attorney of your choosing prior to implementing any of the strategies mention in this communication.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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