On January 9, 2019, Jeff Bezos tweeted that he and his wife MacKenzie were divorcing after a “long period of loving exploration and trial separation.” Since then, the internet has been buzzing with related stories and speculation about how they’ll divide their massive fortune.
Despite all the news, we don’t have many legal details yet—neither spouse has filed a divorce petition, and it’s unlikely the case will proceed in a public courthouse, with divorce filings available to the press. Divorces of the rich and famous are typically handled in conference rooms, by the highest-paid and most seasoned divorce attorneys, financial experts, and a private judge, who oversees the matter quietly and out of the public eye.
However, we can make a few educated guesses. The following is an analysis of how their property division may play out, given what we know about the couple.
No Prenuptial Agreement
A valid prenuptial agreement typically dictates how a couple will divide their property and debts if they divorce. It can also address spousal support. It’s been reported that Jeff and MacKenzie married without a prenup, which makes sense since they didn’t have substantial wealth to protect at the time.
However, the couple may have signed a postnuptial agreement, which is similar to a prenup, but is created during the marriage. If they have a valid postnup, it may control some or all of the financial aspects of their divorce.
Dividing the Bezos Family Fortune
Everyone wants to know how the world’s wealthiest couple will divide their estate. Forbes lists Jeff Bezos as the wealthiest person in the world, with a $137 billion estate, made up of real property, various business ventures, and almost 79 million shares (or 16%) of Amazon stock. (Forbes fails to mention that Jeff Bezos shares this estate with MacKenzie.)
Property division in a divorce depends primarily on state law. For the purpose of this analysis, I’m assuming they’ll file for divorce in Washington State, where they currently reside. Washington is a community property state, which means—absent a prenup or postnup—all property and income acquired by either or both spouses during the marriage is considered “community property” and is owned jointly by the married couple.
Generally, community property is divided equally (50/50) between the spouses. (This doesn’t include “separate property,” which is property that belonged to either spouse before the marriage or which was acquired by a gift or inheritance).
The couple met in 1992, when they were both working at D.E. Shaw in New York. Jeff was a V.P. and MacKenzie was a research associate at the firm. They were married in September 1993. A year later, they moved to Seattle, Washington, where Jeff Bezos founded Amazon.
“I was there when he wrote the business plan, and I worked with him and many others represented in the converted garage, the basement warehouse closet, the barbecue-scented offices, the Christmas-rush distribution centers, and the door-desk filled conference rooms in the early years of Amazon’s history.”
Since they were married before Jeff founded Amazon, the 79 million Amazon shares are likely community property, which should be divided equally. This would leave MacKenzie with almost 40 million shares of Amazon stock, including any voting power or control that comes with being an 8% shareholder.
Will the Divorce Affect Amazon?
Some investors are feeling nervous, citing Jeff’s potential inability to manage the company through his divorce. Some are worried about the possibility that MacKenzie (or a third party) will gain leverage in the company. And others believe there’s going to be minimal impact on Amazon.
The key question investors are asking is: What will MacKenzie do with her 40 million shares? There are several potential scenarios being tossed around, all of which depend on the specific facts of the case. MacKenzie might be able to keep her half and become an active shareholder, making important decisions for the company. MacKenzie could sell her shares as a block to a third party, which could potentially give an outsider a large stake in Amazon. Or Jeff might offer to buy MacKenzie out by paying her for the value of her shares.
Another theory is that Jeff may resign as CEO. If investors and/or the Board of Directors lose confidence in his judgment or ability to lead amid the growing scandal over his affair, they may ask him to step down.
This is all merely speculation at this point. It’s not clear whether MacKenzie is interested in keeping her shares or wants to sell and move on. We’ll have to monitor Amazon’s SEC filings to see if Jeff’s reported 16% ownership changes.
The Real Estate Portfolio
According to Fortune Magazine, the Bezoses are the 25th largest land owners in the U.S., with homes in Washington, California, Texas, New York, and D.C.. Assuming they purchased this property during their marriage, it should also be divided equally.
For most divorcing couples, the family home is their biggest asset and expense, so they typically have to sell it and divide the profits. However, that’s not the only way to handle real estate in a divorce.
Jeff and MacKenzie have several options, including:
- continue to co-own some or all of these properties
- sell them all and split the proceeds, and/or
- sell some properties and buy-out others by paying cash for the other spouse’s 50% ownership or taking a similarly-valued asset.
For example, if MacKenzie wants their Manhattan property, she may propose that she take Jeff’s 50% ownership interest there, and in return, give him her 50% of the Beverly Hills estate (if they’re the same or close enough in value).
Will Jeff’s Affair with Lauren Sanchez Affect the Divorce?
Shortly after Bezos announced the divorce, The National Enquirer published a “world exclusive” about an 8-month affair between Jeff Bezos and T.V. personality Lauren Sanchez.
As interesting as it may be, Jeff’s affair won’t have much of an impact on the divorce. Washington is a no-fault state, which means courts don’t consider either spouse’s bad behavior, like adultery, to be a valid reason for the divorce. No-fault divorce means that spouses don’t have to assign blame for the breakdown of the marriage.
In Washington, courts will grant a divorce if the marriage is “irretrievably broken,” which simply means the relationship is over and there’s no chance for a reconciliation.
Washington courts don’t consider adultery as a basis for awarding more property to an “innocent” spouse. But if Jeff spent a substantial amount of community property funds to further his affair with Sanchez—think expensive holidays or lavish gifts—MacKenzie could request reimbursement in an amount equal to 50% of any wasted assets.
It appears that the couple plans to remain friendly, which could help keep the cost of their divorce down. But even if they agree on all their divorce-related issues, they may still end up with an expensive legal bill.
Their vast and complex marital estate has to be valued and divided, which could require teams of experts from various industries (such as legal, business, finance, real estate, and tax). And the attorneys on both sides could spend many hours drafting, reviewing, revising, and completing the couple’s divorce settlement agreement.
On the other hand, when both spouses are this wealthy and financially savvy, they may already understand their financial rights and obligations and resolve the entire case after a few settlement discussions or mediation sessions.
For more information on divorce and property division, visit Nolo’s Divorce & Family Law Section.