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AgreementsProperty DivisionMark Zuckerberg’s Wedding: A Case Study of Marital Property Rights

May 22, 2012

There are no coincidences when a net worth of  $17 billion dollars is at risk.   That is why it was no coincidence when Mark Zuckerberg waited until after Facebook’s IPO to get married.

When it comes to marital property rights, timing is everything.   Generally, whatever property a party owns or possesses prior to the marriage remains separate property.   Property acquired after a marriage is marital property and may be subject to the other spouse’s claims.    It is no wonder then that the Zuckerberg wedding occurred only after  Facebook went public.

As Tara Siegel Bernard pointed in the New York Times,

          . . .  the lines between community and separate property can get fuzzy pretty quickly after that, particularly over many years of marriage. Separate property, for instance, remains separate unless that money is commingled with “community,” or joint, money and the couple does not keep records of where the money came from or who paid what. . .

Perhaps the biggest issue is what will happen to the anticipated increase in value of the separate property- millions of dollars of Facebook stock.    Normally, appreciation of separate property would remain separate.   But, because Zuckerberg is actively engaged in the business of increasing Facebook’s stock value, his  direct efforts  (and his wife’s indirect efforts) during the marriage may be enough to convert the appreciation  of the separate asset into a marital asset.

The best protection would, of course, be a  pre-nuptial agreement which could address the parties prospective rights should the parties’ marriage end in divorce.    The parties could, for instance, agree that all or some part of the appreciation in value of the Facebook stock would remain separate property.

Just as I am guessing that the timing of the marriage after stock offering was not coincidental, I am sure that the Zuckerbergs did not leave anything to chance and defined their rights in a pre nuptial agreement.

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