How Divorces Work for the Super-Wealthy

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WEST HOLLYWOOD, CA - FEBRUARY 26: (L-R) CEO of Amazon Jeff Bezos and writer MacKenzie Bezos attend the Amazon Studios Oscar Celebration at Delilah on February 26, 2017 in West Hollywood, California. (Photo by Jerod Harris/Getty Images)

Jeff Bezos is splitting up with his wife—which means they have an estimated $137 billion in assets to divvy up.

One such adventure, even if it’s not what the Bezoses had in mind when crafting their tweet, will be divvying up the couple’s enormous financial holdings, which are estimated to add up to about $137 billion.

How will that process unfold and who will end up with how much? It’s common for very wealthy couples to come to an agreement out of court, usually in the interest of privacy. But those who work with really, really rich people know from past experience that their divorces stand apart from those of regular folks.

Assessing the value of stocks can be an involved process, but those are far from the strangest assets that have to be quantified. “From comprehensive in-the-box Barbie dolls and rare guitar collections to bank accounts in the Cayman Islands, everything you’ve acquired as a couple must have a number put on it,” writes Ken Brewe, a lawyer in Washington State, in a post on his firm’s website.

The main determinant of what happens to all these assets is location—where the couple reside—because laws can vary significantly by state. Divorce filers in Washington State, where the Bezoses live, are subject to a legal standard on the books in about one-fifth of states called “community property,” under which everything accumulated during a marriage will be split 50-50 by the courts. “In the case of the Bezoses, since they were married at the time that he moved from Wall Street to start developing Amazon, we would assume that everything in Amazon is going to be community property,” Mindel says.

A possible outcome, then, is that Jeff and MacKenzie Bezos each end up with about $65 billion in Amazon stock. That would wrest the title of world’s richest man away from Jeff (it would revert to Bill Gates), and make MacKenzie the world’s richest woman, overtaking the L’Oréal heiress Françoise Bettencourt Meyers. Another possibility, Mindel says, is that the stock could be transferred into a single entity over which the former husband and wife would have joint control; that arrangement might put Amazon’s investors and corporate directors more at ease, given that there wouldn’t be two separate shareholders. (Perhaps the Bezoses could entrust a close adviser with casting the deciding vote in situations when they disagree about Amazon’s corporate decisions.)

What would change all of this, though, is if the Bezoses had, sometime before their divorce, hammered out an agreement about what would happen should their marriage end; such an agreement would supersede the dictates of community-property laws. But according to the gossip site TMZ, they didn’t have a premarital agreement. And since it’s not known whether they signed any postmarital agreements—which might have happened years ago, when Amazon was transitioning from scrappy start-up to tech colossus—Mindel’s best guess is that everything’s going to get split in half. (Amazon did not respond to a request for information about how the couple’s assets will be divided.)

In states without community-property laws, the default is a principle called “equitable distribution,” under which divorcés’ stuff is instead divided up based on a range of factors, including the role that each spouse played in building up a fortune. “You could have a 75-25 split, a 60-40 split, a 50-50 split,” says Bonnie Frost, a family-law attorney in New Jersey whose clients range from “the regular Joe to somebody who’s super wealthy.”

When a couple in an equitable-distribution state doesn’t agree to a settlement, it gets worked out in court, and the judge considers a variety of criteria. Frost says that generally, the longer the marriage, the closer the split will be to 50-50. But, she says, “if you’re divvying up 20 billion, and you’re getting 1 billion and someone else is getting 19 … a judge might say that’s enough for you.” Even if $1 billion isn’t equal, it’s still plenty to live on, the reasoning goes.

After the Bezoses announced their divorce, allegations surfaced that Jeff Bezos may have been having an affair, but Frost says affairs have little if any bearing on how judges divvy up assets. In New Jersey, she says, “an affair would not affect distribution of property unless one could prove that the dallying spouse used marital assets to further [the] affair.” If that were proved, the cheater would owe the cheated 50 percent of the money spent on the affair.

In the eyes of a judge, a lot can hinge on how responsible each spouse was for earning the money they share. This can lead to some amusing arguments in court. In a post about the divorces of the super-wealthy, Frost discussed the example of an oil executive in Oklahoma who found himself in the strange situation of, she says, downplaying his role in the success of his company—because if the court determined that he was in fact deserving of credit as a superb leader, increases in the value of the business during the marriage would be up for grabs in court.

Sometimes strategies the wealthy use to keep their money during a divorce are outright devious. “We’ve definitely had those types of cases where people try to hide money on the Isle of Man, in Gibraltar, and there’s another island off of Africa they hide things in,” Frost says. She says that’s not as much a concern with divorces between public figures like the Bezoses, because with all eyes on them, they probably aren’t trying to outfox the IRS by stashing money somewhere.

In more modest divorces, the determination of alimony payments can have tremendous effects on spouses’ and children’s basic well-being. Not so much for the super-wealthy. “The reality is, if you have a billion, you probably don’t need alimony, because one of the factors in getting support or alimony is what is your need,” Frost says. She thinks it’s unlikely that Jeff Bezos would be ordered to issue payments to MacKenzie Bezos after they’re divorced.

Still, support payments can be contentious when the sum of money at stake is so large. In one divorce that was settled in 2015, the (now ex-) wife of a hedge-fund billionaire requested $1 million a month for living expenses, including $6,800 a month for groceries and $60,000 a month for paying a private staff. (The full details of the settlement weren’t made public, so it’s unknown how much she got.) Meanwhile, around the same time, the husband of a Walmart heiress was pushing for $400,000 a month in support payments, instead of the $30,000 a month he had agreed to in a prenup.

Frost told me that in the majority of the divorces she’s worked on in which heterosexual couples have amassed a fortune, even though it was typically the man doing the most earning, the woman still usually came out okay. In fact, many of the women on the lists of the United States’ and the United Kingdom’s richest residents came into their money via divorce.

But sometimes even very wealthy spouses can become a lot less wealthy after divorcing: for instance, when one spouse entered the marriage with, say, a large trust fund. During the marriage, when things were pleasant, both spouses might have dipped into it, but if things turn bitter, the original owner of the fund might seal off access. “You can have people who have lived a very, very high-income lifestyle, but all of a sudden … once they’re divorced, they could be in a whole different situation,” Frost says. (Mindel says the assets one brings into a marriage generally aren’t considered community property in states where that standard holds.)

When I asked Frost and Mindel whether the divorces of the super-wealthy were more or less contentious than those of everyone else, they said they didn’t see any such patterns. Instead, they both told me that what tends to matter more is the individuals’ personalities and how much they trust each other. Without mutual trust, Mindel says, “those are going to be the cases that you read about in the papers, where the lawyers make hundreds of thousands, if not millions, of dollars separating the finances of those two individuals, much like you would see in a big corporation that’s having a major shareholder dispute.” But if the harmonious tone of the Bezoses’ divorce announcement is any indication, they should be just fine.

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