Will and Jada Smith Potentially Divorcing Without a Prenup: Lessons for Estate Planning
Even before he had a chance to apply ice to his bruised knuckles, rumors that Will Smith and wife Jada may be divorcing began to swirl. In the media frenzy that followed Smith’s now infamous punch at the Oscars, speculation about the state of their marriage hit fever pitch as Twitter sought to exploit the public’s seemingly insatiable interest in the lives of the rich and famous. Much of the commentary has centered around whether or not the Smiths have a prenup in place. Without a prenup, Jada could be entitled to half of Will’s estimated $350 million fortune. Whether or not they have a prenup in place, there is no question that they should have. The reasons why have nothing to do with the numbers involved and whether one or other of them deserves more than the other as part of a divorce. The rationale for creating a prenup before marriage is essentially the same as the rationale for creating an estate plan.
100% of those getting married do not expect to get divorced, but 50% will. In the absence of a prenup, there is often considerable uncertainty in a divorce situation as to how assets should be divided. Where there is uncertainty a vacuum arises and that vacuum will be filled by conflict. At a time when emotions are at their most potent, it falls on each of the divorcing parties to fight for what they believe they are rightfully entitled to. This leads to nasty and protracted divorces which sometimes play out in the courtroom.
The purpose of a prenup is to remove the uncertainty by creating a roadmap that will be followed in the event of divorce. The parties create that roadmap at a time when cool heads can come together and are not at war. In the event of divorce, the agreed upon procedures can be followed in accordance with the wishes of both parties. They will not have to rely on a judge, who knows nothing about them or their family, to decide how to resolve financial and custody matters between them.
The same principles apply when considering whether to do estate planning. Just as the prenup allows you to take control in a divorce situation, an estate plan allows you to ensure your wishes are honored upon death or incapacity. Rather than a judge deciding what happens to your assets, you can specify who should inherit and in what way. Instead of your children receiving their inheritance outright, you can choose to leave that inheritance in a protected trust that will ensure that what you leave behind is not lost if your children get divorced or if someone sues them. Instead of leaving your family at the mercy of whatever tax laws happen to be in place at the time that you die, you can proactively take steps now to minimize the future tax burden. Before you create a trust, it’s important to review the biggest mistake parents make when setting up a trust fund.
There are so many aspects of our lives where we seek to take control and not leave things to chance. Entering into a prenup is an attempt to maintain control in the most challenging of circumstances. In matters of life and death, taking control means creating an estate plan that is customized to your specific wishes so that it is you rather than a judge that decides what happens to your family and your assets.