Divorce is never easy. But when one of the spouses in question is the richest person in the world, the complications increase exponentially.
Jeff Bezos became the first person to exceed a net worth of $100 billion on the Forbes list of billionaires in early 2018. About a year later, he and his wife of 25 years, MacKenzie Bezos, announced that they would separate, emphasizing the amicable nature of their breakup. The news kicked off wide speculation about how the couple would divide Jeff Bezos’ 16 percent stake in Amazon, worth roughly $140 billion, as well as his other assets.
A 50-50 split would leave both Jeff and MacKenzie Bezos among the world’s wealthiest people, and would likely make her the world’s richest woman (though he would move a spot or two down the list of the world’s richest men). This is not an unimaginable scenario. The pair live primarily in Washington state, which is a community property state. That means that any wealth created during their marriage should theoretically be split equally between the two, unless some other factors come into play.
Jeff and MacKenzie Bezos married the year before he founded Amazon. No one could have written a prenuptial agreement in 1993 that anticipated a then-nonexistent company would become the commercial juggernaut that Amazon is in 2019.
The state of any such agreement, or even its existence, is unclear. TMZ reported that there is no prenuptial agreement; if true, this could mean that the divorce will proceed under Washington’s state law. (As of this writing, the pair has not formally filed divorce papers, in Washington or elsewhere.) It is possible that the couple could have signed a postnuptial agreement, however, which would shape the divorce proceedings. We may have no way to be sure, since prenuptial and postnuptial agreements are opaque by design. Even if we discover that Jeff and MacKenzie Bezos did sign such a document, we might never know exactly what it entailed.
The divorce is also likely to involve some nuanced questions of valuation. While publicly traded stock is easy to value, some of the assets in play are more complex. For instance, how to measure and divide the value of Jeff Bezos’ stake in The Washington Post? This means that, for now, all estimates of the size of the divorce settlement are necessarily educated guesses.
Even so, it seems obvious that this divorce is on track to create one of the largest settlements on record. The most expensive divorce known prior to the Bezos breakup was the 1999 split of Alec and Jocelyn Wildenstein. Jocelyn Wildenstein was awarded $2.5 billion initially, and $100 million for each of the following 13 years, for a total payout of $3.8 billion. MacKenzie Bezos potentially stands to collect much more; even if she receives far less than 50 percent of the pair’s current net worth, the award will easily surpass the value of this prior settlement.
Jacqueline Newman, a matrimonial law attorney who is a managing partner of Berkman Bottger Newman & Rodd LLP, told Business Insider that divorces involving high-net-worth individuals are often complicated by the fact that many of the couple’s assets are not easy to divide. “The major thing for billionaires is that most of the time, their assets are very complex and mostly illiquid — with Bezos, a lot of his assets are linked to Amazon stock,” Newman observed.
Beyond the wealth involved, the Bezos divorce raises questions for Amazon’s immediate future. Not that the company is conceivably in any real trouble, but observers have speculated that Bezos may have to sell or transfer a significant portion of his Amazon stock – and thus decrease his level of control. And if MacKenzie Bezos suddenly comes into independent possession of half of the largest stake in the company and chooses not to liquidate it, she might seek a seat on the company’s board or push for major strategic changes. Robert Frank of CNBC reported that, at the company’s current valuation, MacKenzie Bezos could receive as much as $66 billion in Amazon stock, instantly making her the company’s second-largest shareholder. While she worked for Amazon in its earliest years, MacKenzie Bezos has not been significantly involved in the company since then; she has, instead, focused on her career as a novelist.
CNBC’s Frank also suggested that MacKenzie Bezos may choose not to push for any settlement that requires her ex-husband to liquidate or transfer his shares, because the family fortune’s potential growth is largely tied to Jeff Bezos’ ongoing control of Amazon. The nuance of the final settlement may also reflect the pair’s intentions for the futures of their four children.
The lesson to draw from the divorce of Jeff and MacKenzie Bezos is, first and foremost, the importance of prenuptial agreements for people of high ambition, even if the assets involved at the time of the marriage are not significant. Prenuptial agreements can be difficult to discuss, but the best time to decide on how to divide assets is before a potential breakup, not during one. While postnuptial agreements often have a more difficult time withstanding a court’s scrutiny, a properly structured agreement can still provide clarity and protection for both partners. Postnups can also be narrow, which means entrepreneurs can consider documents specifically focused on a divorce’s impact on a business or intellectual property, if they wish. In addition, both prenups and postnups can help protect the couple’s privacy during divorce proceedings.
Not everyone needs a prenuptial or postnuptial agreement. But if you aim to be the next Jeff Bezos, you definitely are among those who do.
Posted by Paul Jacobs, CFP®, EA
MacKenzie and Jeff Bezos (center) at a naturalization ceremony, June 14, 2016.
Photo by Barry Bahler, courtesy the U.S. Department of Homeland Security.
Divorce is never easy. But when one of the spouses in question is the richest person in the world, the complications increase exponentially.
Jeff Bezos became the first person to exceed a net worth of $100 billion on the Forbes list of billionaires in early 2018. About a year later, he and his wife of 25 years, MacKenzie Bezos, announced that they would separate, emphasizing the amicable nature of their breakup. The news kicked off wide speculation about how the couple would divide Jeff Bezos’ 16 percent stake in Amazon, worth roughly $140 billion, as well as his other assets.
A 50-50 split would leave both Jeff and MacKenzie Bezos among the world’s wealthiest people, and would likely make her the world’s richest woman (though he would move a spot or two down the list of the world’s richest men). This is not an unimaginable scenario. The pair live primarily in Washington state, which is a community property state. That means that any wealth created during their marriage should theoretically be split equally between the two, unless some other factors come into play.
Jeff and MacKenzie Bezos married the year before he founded Amazon. No one could have written a prenuptial agreement in 1993 that anticipated a then-nonexistent company would become the commercial juggernaut that Amazon is in 2019.
The state of any such agreement, or even its existence, is unclear. TMZ reported that there is no prenuptial agreement; if true, this could mean that the divorce will proceed under Washington’s state law. (As of this writing, the pair has not formally filed divorce papers, in Washington or elsewhere.) It is possible that the couple could have signed a postnuptial agreement, however, which would shape the divorce proceedings. We may have no way to be sure, since prenuptial and postnuptial agreements are opaque by design. Even if we discover that Jeff and MacKenzie Bezos did sign such a document, we might never know exactly what it entailed.
The divorce is also likely to involve some nuanced questions of valuation. While publicly traded stock is easy to value, some of the assets in play are more complex. For instance, how to measure and divide the value of Jeff Bezos’ stake in The Washington Post? This means that, for now, all estimates of the size of the divorce settlement are necessarily educated guesses.
Even so, it seems obvious that this divorce is on track to create one of the largest settlements on record. The most expensive divorce known prior to the Bezos breakup was the 1999 split of Alec and Jocelyn Wildenstein. Jocelyn Wildenstein was awarded $2.5 billion initially, and $100 million for each of the following 13 years, for a total payout of $3.8 billion. MacKenzie Bezos potentially stands to collect much more; even if she receives far less than 50 percent of the pair’s current net worth, the award will easily surpass the value of this prior settlement.
Jacqueline Newman, a matrimonial law attorney who is a managing partner of Berkman Bottger Newman & Rodd LLP, told Business Insider that divorces involving high-net-worth individuals are often complicated by the fact that many of the couple’s assets are not easy to divide. “The major thing for billionaires is that most of the time, their assets are very complex and mostly illiquid — with Bezos, a lot of his assets are linked to Amazon stock,” Newman observed.
Beyond the wealth involved, the Bezos divorce raises questions for Amazon’s immediate future. Not that the company is conceivably in any real trouble, but observers have speculated that Bezos may have to sell or transfer a significant portion of his Amazon stock – and thus decrease his level of control. And if MacKenzie Bezos suddenly comes into independent possession of half of the largest stake in the company and chooses not to liquidate it, she might seek a seat on the company’s board or push for major strategic changes. Robert Frank of CNBC reported that, at the company’s current valuation, MacKenzie Bezos could receive as much as $66 billion in Amazon stock, instantly making her the company’s second-largest shareholder. While she worked for Amazon in its earliest years, MacKenzie Bezos has not been significantly involved in the company since then; she has, instead, focused on her career as a novelist.
CNBC’s Frank also suggested that MacKenzie Bezos may choose not to push for any settlement that requires her ex-husband to liquidate or transfer his shares, because the family fortune’s potential growth is largely tied to Jeff Bezos’ ongoing control of Amazon. The nuance of the final settlement may also reflect the pair’s intentions for the futures of their four children.
The lesson to draw from the divorce of Jeff and MacKenzie Bezos is, first and foremost, the importance of prenuptial agreements for people of high ambition, even if the assets involved at the time of the marriage are not significant. Prenuptial agreements can be difficult to discuss, but the best time to decide on how to divide assets is before a potential breakup, not during one. While postnuptial agreements often have a more difficult time withstanding a court’s scrutiny, a properly structured agreement can still provide clarity and protection for both partners. Postnups can also be narrow, which means entrepreneurs can consider documents specifically focused on a divorce’s impact on a business or intellectual property, if they wish. In addition, both prenups and postnups can help protect the couple’s privacy during divorce proceedings.
Not everyone needs a prenuptial or postnuptial agreement. But if you aim to be the next Jeff Bezos, you definitely are among those who do.
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