Earlier this year it was announced that Amazon’s billionaire CEO, Jeff Bezos and his wife of 25 years, MacKenzie Bezos, would be divorcing. It was reported that the couple did not have a prenuptial agreement. Experts speculated this could be costly for the world’s wealthiest man, who’s fortune is estimated at $140 billion.
Premarital agreements (also called prenuptial agreements or “prenups”) establish the property and financial rights of each spouse in the event of a divorce. Traditionally, prenups were something “rich people” would do prior to marriage. However, it can be worth thinking about your current assets and potential for future wealth before you get married, even if you don’t consider yourself “rich.”
Among younger couples, there’s often an interest in keeping future assets and earnings separate. One party may want to protect an interest in a family business, or the potential for future income from an entrepreneurial venture. Older couples and those in second marriages often look to prenups to preserve assets they already have or protect inheritances for children from a prior marriage.
Among other aims, a prenup could also outline support for a spouse who gives up his or her career to care for the couple’s children, or on the flip side, include a provision to waive the right to spousal support if state law allows.
As you can see, a prenup may not be a bad idea for “regular folks” who may have some assets prior to the marriage they wish to protect or are looking to what they will potentially earn in the future after they have tied the knot.
California law defines community property as any asset acquired or income earned by a married person while living with a spouse. Separate property is defined as anything acquired by a spouse before the marriage, during the marriage by gift, devise, or bequest, (such as inheritance) and after the parties separate. The law requires that the community estate be divided equally if there is no written agreement requiring a particular division of property. This means that from the total fair market value of the community assets, the joint obligations of the parties are subtracted, yielding the net community estate. Unless agreed otherwise, each spouse must receive half of the net community estate.
In the Bezos’s case, it would be very surprising if the parties didn’t settle because of the magnitude of money and potential damage a public divorce could have to the company.
If you need advice on whether a prenuptial agreement is right for you, call us to schedule your free 30 minute consultation!