Four Takeaways from the Bezos Divorce for the Non-billionaires in the Room

By now, many of you may know that Jeff Bezos, the founder and CEO of Amazon, and his wife, MacKenzie Bezos, a novelist, are divorcing after twenty-five years of marriage. With four young children and wealth estimated at approximately $140 billion, this divorce is already one of the highest profile divorces in recent memory. Pulling back the curtain on what many see as a private family, many news outlets and gossip sites are pursuing every possible angle and reason for why this long-term marriage is coming to an end. With such wide-ranging potential ramifications, it is no surprise that Jeff and MacKenzie are attempting to maintain privacy and portray an amicable parting by posting a joint statement on Twitter that they see “wonderful futures ahead, as parents, friends, partners in ventures and projects, and as individuals pursuing ventures and adventures.”

Giving back ring during divorceThe sheer scope of the Bezos estate has left many wondering how the divorce will play out. While the parties live in Washington State, which is a community property state wherein most marital assets are potentially subject to equal distribution, this post will discuss what could happen if Jeff and MacKenzie were divorcing in New Jersey, which is an equitable distribution state.

Here are four takeaways from the Bezos divorce if it was happening here in New Jersey:

  1. Pre or Postnuptial Agreements – Reports are unclear as to whether Jeff and MacKenzie had a prenuptial or postnuptial agreement, but most suggest that they, at the very least, did not have a prenuptial agreement governing the disposition of financial issues at the time of a divorce.

In New Jersey, prenuptial agreements entered into after June 28, 2013 are more likely to be enforced if they are deemed fair and not unconscionable at the time the agreement was entered.Any agreement entered into prior to such date could also be examined for fairness and unconscionability at the time of the divorce, which is friendlier to the person seeking to set the agreement aside and one of the reasons why the law changed five years ago.Separately, the very limited New Jersey case law on postnuptial agreements questions whether such agreements are enforceable and should give pause to anyone seeking to rely upon them at the time of a divorce.

  1. Equitable Distribution – As noted above, New Jersey is an equitable distribution state – not a community property state – which means that assets are not automatically subject to equal division. Instead, assets are to be equitably divided based on a consideration of various statutory factors including, but not limited to, the length of the marriage, the age and health of the parties, the standard of living established during the marriage, each party’s income and earning capacity, and the contributions made by each party to the marriage and the earning power of the other party. In this case, with the nature of the sophisticated business and stock assets at issue, the use of forensic accountants can prove critical in facilitating an understanding of the marital universe subject to distribution and how such assets can be divided.

From what I’ve read, MacKenzie’s substantial contributions to the marriage allowed Jeff to build the Amazon empire that created the parties’ fortune.With a 16% interest in Amazon, many interesting issues arise as to whether MacKenzie should maintain an interest in the company, what impact the divorce will have on Amazon’s value, whether a division of the marital interest in the company will devalue Jeff’s role and, by consequence, the company’s worth, should both parties have say in company decisions and more.While a New Jersey court will approach such issues on a case-by-case basis, they are better addressed in the confines of private mediation where company details are kept from the public purview and creative solutions can be developed.

Separately, many people are wondering whether Jeff’s relationship with another woman (it is uncertain based on reports as to whether he engaged in an extramarital affair) could have an impact on the divorce.While adultery could have a substantial emotional impact on how a divorce matter unfolds, its impact on the financial issues is minimal unless marital assets were expended on the other person/to enable the relationship.

  1. Alimony – For a marriage of a duration longer than twenty years such as that here, MacKenzie could be entitled to what is known as “open durational” alimony, where there is no specifically defined end date to the alimony obligation. For marriages of less than twenty years, an alimony obligation would generally be one of limited duration. As with New Jersey’s equitable distribution law, its alimony law similarly requires consideration of several factors in determining how much alimony should be and for how long it should be paid. Many alimony factors overlap with the equitable distribution factors, including the length of the marriage, age and health of the parties, lifestyle lived during the marriage, earning capacities and more.

The alimony law is clear, however, that each party is entitled to live a lifestyle reasonably comparable to that lived during the marriage.In higher wealth cases, an analysis of the parties’ marital lifestyle can be an important barometer by which to calculate alimony. Oftentimes, forensic accounting experts prove pivotal in establishing the marital lifestyle and resulting future needs. Since MacKenzie will likely receive billions of dollars in income-generating assets, however, it is likely there will be no independent alimony obligation.

  1. Child Support – I think we can all agree that the four Bezos children will likely have nothing to worry about when it comes to their financial support. Child support can be structured in various ways, both sophisticated and otherwise. In fact, without knowing anything about the Bezos wealth and estate planning strategies, it is likely that various trusts have already been established to ensure the children are always provided for.

In New Jersey, children are entitled to benefit from the good fortunes of each parent, but such benefit has its limits even within the confines of seemingly limitless wealth. In other words, the support still must be “reasonable” under the facts and circumstances at issue.

For matrimonial lawyers, the Bezos divorce presents many interesting discussion points. While few people in the world possess comparable wealth, the issues this family faces are not unlike those experienced by many divorcing families in New Jersey. From cases involving more modest financial circumstances to those of high income/assets, it is critical to understand how New Jersey law impacts upon your case and to ensure that the right strategies are employed to achieve a desirable outcome.

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