Did Mark Zuckerberg Get a Prenup?
With all of the hype surrounding the Facebook (NASDAQ: FB) initial public offering, it is easy to assume that Friday, May 18th was the biggest day in Mark Zuckerberg’s still relatively young life. Yet, he organized a potentially more meaningful event the day after the IPO, when he invited around a hundred friends to his home in Palo Alto, CA to celebrate his marriage to Priscilla Chan, whom he had been dating since their days as Harvard undergraduates. This celeb’s secretive ceremony and the subsequent honeymoon have captured the media spotlight. There is one question, however, that everybody across the country is asking: did Zuckerberg get a prenup?
It is assumed by non-1 percenters that most high net-worth individuals arrange for prenuptial agreements, which contractually detail how assets will be divided in the case of divorce. These arrangements are especially important in California, which is one of nine Western “community property” states that use still use the Mexican marital property system. In these states, any wealth acquired after the exchange of vows becomes community property, meaning it is collectively owned by both marriage partners, and will likely be split 50-50 in a divorce settlement. Most states rely on the equitable distribution method of dividing property, which gives a judge authority to decide the fairest distribution of resources. In fact, California’s system is so communitarian that Facebook assets might well have been equally divided even if the couple had not married. Such recognition of common-law marriage has recently sparked controversy in Quebec, where the ubiquity of so-called de facto unions has forced the courts to expand the definition of marriage.
Because of the vagaries of the state in which he lives, most experts say Zuckerberg would be crazy not to have arranged a prenup with his new bride. Yet, a spokesman for Facebook refused to comment on such an arrangement’s existence. If Zuckerberg and Chan did not, in fact, talk about how to divide assets in the case of divorce (such a topic is likely difficult to broach), the wedding’s timing immediately after the IPO will be beneficial to the founder of Facebook. The initial public offering cemented the valuation of Facebook to Zuckerberg, who was worth $19.4 billion after the tumultuous Friday when shares of FB began trading. This represents the amount the magnate brought to the marriage, so it would be difficult for Chan to lay claim to a portion of this wealth.
The date of the wedding, which Zuckerberg swears was entirely coincidental, does not exclude Chan from all pecuniary interest in Facebook’s future success. Zuckerberg has only exercised 60 million of his 120 million stock options. Thus, any value the other assets accrue if and when they are exercised during the Zuckerberg-Chan union would be community property in absence of a prenup. While the marriage ceremony’s procession after the IPO adds clarity to what is and will always be Zuckerberg’s, it does not render the formulation of a prenuptial agreement unnecessary.
Zuckerberg is still on his European honeymoon, so divorce is probably not in the cards anytime soon. Facebook’s chairman currently has more to worry about, including the possibility of losing his wealth while still married—his net worth has sunk to $14.4 billion due to Facebook’s lackluster performance in the markets. The social network company’s stock has plummeted 26% in recent weeks in a turn of events that knocked the CEO off Bloomberg’s 40 richest persons list. While he may not have new wealth to add to his already thick wallet, at least he can regale in his new bride. Lawyers and psychiatrists alike say that a prenup would make this relaxation considerably more comfortable.
Disclosure: The author has no holdings in the stocks mentioned in this article and has no plans to initiate any positions within the next 72 hours. He does, however, have the intention of rating these stocks on WealthLift.com, a social media website where investment ideas are shared openly and free.