Eminentoes

A Facebook Marriage

Why did Mark Zuckerberg marry the day after the largest IPO in U.S. history?

By 5.22.12

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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.

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About the Author

Russ Ferguson is a lawyer and writer in Charlotte, North Carolina.