Why Jeff Bezos should have gotten a prenup & why you should too

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Hanna Horvath, CFP®

Hanna Horvath, CFP®

Managing Editor & Certified Financial Planner™

Hanna Horvath, CFP®, is a certified financial planner and former managing editor at Policygenius. Her work has also been featured in NBC News, Business Insider, Inc. Magazine, CNBC, Best Company, and HerMoney.

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The richest couple in the world is a couple no more.

Jeff Bezos, the CEO of Amazon and the richest man in the world, announced he and his wife, MacKenzie, are getting divorced. The couple hadn’t signed a prenuptial agreement, meaning his soon-to-be ex-wife could be walking away with half of his approximately $136 billion fortune.

What is a prenup?

Michael Sampson, a divorce attorney from Florida, describes it a “contract between two marrying people and their agreement on how finances will be handled in divorce or in death.”

Prenups became prominent after the establishment of no-fault divorces in the 1970s and are becoming more common as couples get married older and sometimes more than once.

Sampson said couples typically sign prenups so their kids aren’t disrupted financially by a second marriage or because they have a family inheritance to protect.

A prenup is different than a will. Your spouse is entitled to an “elective share” of your entire estate after you die, typically around 30%. If you leave them out of your will, they can make a claim against your estate for that share. Only a prenup would waive your spouse's elective share, if they agree to it. (Our partner Trust & Will can help you easily create a will.)

Sounds romantic. But Sampson argues a prenup forces a couple to discuss something important before their marriage: money.

“I think it strengthens the marriage because it forces them to consider certain realities,” he said. “It has couples look at their money in an adult way.”

According to a Policygenius survey, one in five couples don’t share money. An even greater percentage don’t discuss finances. This can negatively impact a marriage and lead to divorce, said Sampson. Even if you manage money separately or have it hidden under your mattress, it will almost always come out in a divorce proceeding and be divided evenly.

So what’s going to happen to Bezos?

Though Bezos’ wealth may make him an exceptional case, Sampson predicts the divorce will proceed like any other: Both parties will disclose their assets to each other, figure out how much they need to pay in child support and disclose any liabilities. A judge will value everything and divide things as equally as possible.

Sampson said this high-profile divorce points to the importance of planning ahead. You never know where you’ll be financially (and romantically) in the future.

“You get this storybook picture of couples who are in love and think they will never break up,” he said. “They don’t think they need a prenup because they will be together forever. And that’s not always the case.”

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Image: PeopleImages

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