On January 11, 2016, 84-year-old media mogul Rupert Murdoch and former supermodel Jerry Hall announced their engagement. This will mark the fourth marriage for Murdoch and the first for Hall (she and former, long-time love Mick Jagger were never legally married). You know what that means … It’s time to draft a prenup!
With an estimated net worth north of $11 billion (according to Forbes),* and as the father of six children, Murdoch isn’t likely to walk down the aisle until the ink dries on a carefully crafted premarital agreement with Hall.
Along with providing for his heirs, the billionaire also has a massive empire to protect – so you can bet his lawyers are hard at work. While Hall isn’t destitute (The Washington Post recently estimated her net worth near $15 million), her bank account pales in comparison to Murdoch’s. For people with considerable assets like Murdoch, signing a prenup with a future spouse is a no-brainer.
According to Dallas Divorce Attorney Christine Powers Leatherberry, “Many people like Murdoch and Hall marry later in life and/or for a second or third time in today’s society. This also means they have had time to accumulate more wealth. A premarital agreement can help wealthy individuals protect their assets, provide for children from an earlier marriage and potentially avoid litigation should the couple divorce.”
So what DO wealthy individuals typically request when drafting their prenups? We asked Christine to share the top five things her affluent clients require and/or she recommends.
No. 1: Opt for an “all property remains separate” premarital agreement.
“We refer to this as a ‘roommate’ type of premarital agreement, or ‘what’s mine is mine, and what’s yours is yours.’ A wealthy individual like Murdoch will usually want to ensure NO community property is created during the marriage. He’ll likely agree to cover monthly living expenses and give Hall an allowance and other concessions but require she give up any community property rights,” says Christine.
No. 2: Signing bonus.
In order to entice the less-monied party to sign a premarital agreement, the affluent party may include financial enticements to seal the deal. As Christine explains, “Many of our wealthy clients offer a set dollar amount to be paid to the less-monied party upon the signing of the agreement – or a ‘signing bonus’ – to ease any reluctance to sign the prenup.”
No. 3: Other financial incentives and restrictions.
A signing bonus may help close the deal, but spelling out how much money the non-monied spouse will have at his or her disposal following the wedding is also important to Christine’s affluent clients.
“It’s helpful for both parties to agree on specific budgets as well as what potential payouts will be offered in the event of a divorce. The more clearly these items are spelled out in a premarital agreement, the less likely the couple will face friction over money later on,” says Christine. Some common line items include:
During the marriage:
- Monthly spending budget for miscellaneous expenses.
- Shopping budget.
- Car allowance.
In the event of divorce and/or death:
- Alimony or ‘exit bonus’ – based on duration of marriage – should the couple divorce (may include cash, a home and/or other assets).
- Provisions for treatment of any retirement plans or employee benefits.
- Homestead rights – who will live in the couple’s home (or homes) after death, if the residence was separate property.
No. 4: Requirements pertaining to wills, trusts and life insurance.
In Murdoch’s case, where the future of the family business and six heirs’ livelihoods are at stake, plans undoubtedly have already been made regarding how the business will be run, the distribution of any wealth and who will be designated as beneficiaries for certain financial accounts and insurance policies following his death. How large a piece of that pie Hall will receive (if any) and from where, will certainly be spelled out in detail in their prenup.
Learn more about business prenups in this earlier post.
No. 5: Confidentiality provisions.
Most wealthy and high profile individuals (such as billionaires, celebrities and professional athletes) value their privacy, and a prenup can help ensure private matters stay private.
According to Christine, “Premarital agreements allow couples to put their expectations in writing, which can help prevent conflict in the future. For our high profile and affluent clients, we also recommend including terms of confidentiality and penalties associated with violations of those terms.
We also encourage high profile individuals to include a ‘book deal clause’ – which is also a penalty clause. In Murdoch’s case, he may want to prevent Hall from profiting from a tell-all book about their relationship or his business dealings. The book deal clause would require that any proceeds derived from such a book would revert back to Murdoch (or his estate in the event of his death).”
The Tip of the Iceberg
This “Top 5 List” provides a brief snapshot of items a wealthy individual might include in his or her premarital agreement in Texas. Laws do vary from state to state and overseas. If you plan to marry and are concerned about protecting your assets and business concerns and the rights of your heirs, speak with a family law attorney about your options. He or she can help you draft an appropriate agreement based on your individual circumstances and where you live.
* Mudoch’s net worth as published by Forbes on January 20, 2016.
Photo Source: Getty Images – John Shearer