Jensen Huang Could Avoid Losing 100 Trillion Won in a Divorce... [Weekend Money]

Forbes: "Wife Could Receive 100 Trillion Won in Asset Division"
As U.S. Billionaire Numbers Rise, Divorces and Asset Divisions Increase
WSJ Advice: "Sign a Prenup and Separate Family Finances"
"Specify in a Prenup That Business Interests Are Excluded from Division"

As the scandal involving Nvidia CEO Jensen Huang spreads across the artificial intelligence (AI) industry, attention is turning to the possibility of divorce and the size of a potential asset division. Huang admitted to an affair and apologized on November 8. A second affair allegation emerged on November 11. Some estimates suggest that, in the event of a divorce, his wife could receive half his assets, or about 104 trillion won.

Wall Street Mogul's Divorce Trial... Four Precautions for Founders, According to Divorce Lawyers

Amid the growing attention, the Wall Street Journal (WSJ) recently reported on a divorce case involving a Wall Street figure and highlighted "divorce advice for founders." On October 20, the WSJ took a closer look at the case of Two Sigma co-founder John Overdeck and his wife, who are in the midst of divorce proceedings.

The WSJ said the trial "offers a glimpse into the enormous wealth created on Wall Street" and "shows how great wealth can come back to haunt founders and other business owners when they fail to take the proper precautions."

Two Sigma is a hedge fund that invests using mathematics and data models. The Overdecks have been fighting their case in a New Jersey court for months. Overdeck offered to pay his wife $723 million (about 970 billion won). His wife, Laura, values her stake at $6.2 billion and is seeking 35% of that, or about $2.2 billion (about 3 trillion won).

In its analysis of the case, the WSJ cited divorce lawyers and advisers who offered four key pieces of advice: record the company's value before marriage, sign a prenuptial agreement, set compensation at market rates, and keep family finances separate from the business.

From Recording a Company's Value Before Marriage to Separating Family Finances...Precautions Highlighted by the Overdeck Trial

Alice Huang (Chinese name: Huang Le), who is suspected of being a Chinese spy and is alleged to have had an affair with Nvidia CEO Jensen Huang, reportedly returned to China on the 12th (local time) and is staying in Beijing. Yonhap News Agency.

The first piece of advice is to document the company's value at the time of marriage. When the Overdecks married in 2002, Two Sigma had only just begun investing. In New Jersey and several other U.S. states, even the increase in value during a marriage of a company founded before the marriage can be subject to division, making its value at the time of marriage the starting point. Overdeck's side valued his stake at $50 million at the time. His wife's side, however, argues that "the stake was not finalized until long after the marriage." Lawyers say documenting the value before marriage can help reduce disputes over how it should be assessed.

Prenuptial agreements are a somewhat unfamiliar concept in South Korea. They are contracts in which a couple decides in advance how to divide their assets in the event of a divorce, and are reportedly used by wealthy individuals and founders in the United States. The Overdecks did not sign a prenuptial agreement. In an interview with the WSJ, a local divorce lawyer said, "A prenuptial agreement can start with a single line stating that business interests are not included in marital property." The lawyer added, "You should be prepared to make concessions by giving up other assets, such as a home."

Compensation can also become an issue. Overdeck could set his own pay, and owners in this position may be suspected of deliberately taking less compensation to reduce the value of their assets. The advice is to have a third party determine market-rate compensation and document it.

Jensen Huang and Alice Huang

The final piece of advice is to separate family finances from the business. Two Sigma operated a family office, a dedicated organization that manages the assets of wealthy families, until around 2023, and company employees also handled Overdeck's personal affairs. During the trial, it was disclosed that Overdeck had discussed with the company's general counsel at the time, who was a lawyer, the issue of removing his wife from the family foundation. Although communications with a lawyer are generally protected from disclosure in court under attorney-client privilege, that lawyer represented the company, not Overdeck personally. The court did not recognize the conversation as a protected consultation. In other words, discussions about personal matters with someone at the company may not be protected.

Experts cited by the WSJ advise treating family finances separately from the business, with a separate adviser, documented records, and regular reporting to all family members, as if they were an independent organization. If company employees handle the owner's personal affairs, they may find themselves caught between the owner's interests and those of other family members or shareholders.

Jensen Huang Founded Nvidia After His Marriage...Most of His Assets Could Be Divided, but the WSJ Advice Has Limited Relevance

Nvidia CEO Jensen Huang and SK Chairman Chey Tae-won raise their glasses during a chimaek gathering at Kkanbu Chicken's Samseong branch in Gangnam-gu, Seoul, on June 7. Yonhap News Agency.

The circumstances of Jensen Huang and his wife differ somewhat from those of the Overdecks. They have been married since the mid-1980s, and Huang founded Nvidia in 1993. There was no company to value when they married.

According to Forbes, Huang's net worth stood at $155.2 billion (208 trillion won) as of November 9 local time. California, where the couple lives, is a community property state. Under this system, spouses jointly own and share responsibility for income, assets, and debts acquired during the marriage; apart from property designated as separate, the rest is divided equally in a divorce. Since Nvidia was founded after the marriage, Nvidia shares and compensation from the company are subject to division. Most of Huang's wealth consists of about 870 million Nvidia shares held in his own name and through family trusts.

Of the WSJ's four recommendations, documenting a company's value before marriage does not apply, and the advice on compensation is also beside the point. The board sets and discloses the compensation of Nvidia's CEO, a publicly listed company. The family's finances are also a different matter. Huang reportedly joked to colleagues recently that his wife handles all the paperwork and finances, saying, "I don't even know our home address, and I don't pay the utility bills." There is no known indication that Nvidia employees have been involved in his personal affairs. That leaves a prenuptial agreement, but it is not known whether the couple signed a separate agreement in preparation for a possible divorce.

New York divorce lawyer Lisa Zeiderman told the WSJ, "A divorce trial is a very dangerous place, because each side knows all the other's weaknesses." San Francisco lawyer Laura Chickering said, "The best time to sign a prenuptial agreement is when the business is still small and its growth potential is difficult to assess."

This content was produced with the assistance of AI translation services.