What happens before the heirs of two family fortunes join together in holy matrimony? A pre-nuptial agreement, oftentimes!
The Daily Mail reported on the prenup last week, noting that Brooklyn’s parents, athlete David Beckham and fashion mogul Victoria Beckham, have a net worth of £380 million (about $495 million USD). But Nicola’s father, financier Nelson Peltz, has an estimated fortune of £1.3 billion (about $1.7 billion USD).
Adam Citron, a partner at Davidoff Hutcher & Citron at Davidoff Hutcher & Citron LLP, tells Distractify it’s “extremely common” for wealthy families to sign a prenup.
Lawyers advise their high-wealth clients to get prenups, even when it’s family money at stake.
“Most ultra-wealthy people have lawyers with whom they regularly work, and given the amount of money at stake, [they] are likely to advise their clients to get prenuptial agreements as a matter of course,” Citron adds.
And issues can arise even when it’s family money and not the couple’s money in question, Citron says. “For example, a court will look at the lifestyle of a marriage in determining support and may input income to a party if it is determined that throughout the marriage, family funds were used on a regular and consistent basis to support the lifestyle of the marriage.”
“Another example would be if the marital residence was purchased with separate property of one party. Without a prenuptial agreement, it would be very difficult to remove a spouse from that residence. However, with a prenuptial agreement, that issue can be dealt with and agreed upon. Pre-nuptial agreements outline exactly what is separate property and what is marital property. It sets a clear path and distinction.”
Brooklyn and Nicola’s reported prenup presumably protects their “individual, pre-marital separate property.”
In the specific instance of these newlyweds — Brooklyn, a photographer, and aspiring chef, and Nicola, an actress known for her roles in Bates Motel and the Transformers franchise — Citron says she would expect that “both parties waived maintenance and that their separate property would remain their separate property.”
“Presumably, the prenuptial agreement has gone to great lengths to protect their individual, pre-marital separate property,” he adds.
Any earnings after the wedding would be split evenly by default, unless the prenup specified otherwise.
And if Brooklyn and Nicolas’ happily-ever-after doesn’t last ever after, their post-marital earnings would be split evenly “as a default,” the lawyer explains. “However, the parties may have agreed otherwise in the pre-nuptial agreement. It depends on what was negotiated in the prenuptial agreement as to income earned and assets acquired during the marriage.”
Any prenup for the couple would likely handle passive and active appreciation on assets Brooklyn and Nicole owned before tying the knot, Citron explains. “Active appreciation is where a party actively engages in an activity causing or assisting in the appreciation. That appreciation is considered marital. Passive appreciation is appreciation based solely on market forces, which will remain separate if the asset was separate, pre-marital property.”
Citron also points out that a post-nuptial agreement can change the terms of the prenup. “But that post-nuptial agreement may not be considered valid if it lacks the proper consideration,” he says. “It is best to have a well-drafted pre-nuptial agreement that deals with and contemplates various circumstances which may arise during a marriage.”