Sometimes timing is everything. In one week, Mark Zuckerberg
turned 28 years old, became a billionaire in the largest tech IPO
in U.S. history, and got married. Sure, 28 years old is a
reasonable age to get married and a great age to become a
billionaire. But after dating for ten years, why did he choose to
marry his girlfriend the day after his IPO?
It may be coincidence, or it may be that he was ready to settle
down after accomplishing what is probably the biggest goal of his
life. But it also could be prenuptial insurance in case of problems
down the road.
By most accounts, Priscilla is pretty lucky, marrying the guy of
her dreams who just happens to be America’s newest billionaire.
However, if the marriage doesn’t work out, things may work out
quite a bit better for Mr. Zuckerberg than they do for his
wife.
That’s because the Zuckerbergs live in California and California
is a community property state. In a community property state, any
income earned during the marriage (with the exception of
inheritances and certain gifts) is owned by the couple as an
economic unit instead of either the husband or the wife
individually. Therefore, in the case of divorce, the assets of the
couple are split 50-50.
But, income that was received by either individual
before the marriage — even one day before — is separate
property. If the couple divorces, the person who originally
earned the separate property, or anything bought with it, keeps all
of it — 100%.
By getting married the day after Facebook went public,
instead of anytime before (during the decade he was dating his now
wife), Mark Zuckerberg ensured that all the earnings from his big
day will remain his, should his marriage not work out at any
time.
Of course, most of his earnings from last Friday came in the
form of stock, and stocks gain and lose value. But the capital
gains of stocks during a marriage are still considered the separate
property of the person who owns the stock in a community property
state. In other words, Mark Zuckerberg keeps the value of those
stocks even if they appreciate to a trillion dollars and no matter
when he cashes out his shares.
Dividends, on the other hand, are treated as new income and
community property; they are split 50-50 in the case of divorce.
But most tech companies don’t distribute dividends, and if they do,
they are generally paltry sums. Instead, investors flock to stocks
like Facebook because of the prospect of making huge capital
gains.
No doubt Mark Zuckerberg will go on to make plenty of money, and
his marriage will probably thrive. But if it doesn’t, he will
almost certainly leave the marriage much better off than his new
bride — all because he got married the day after getting rich
instead of any day before.
