In early January, Amazon founder and CEO, Jeff Bezos, and his wife of 25 years, MacKenzie, made a joint statement on Twitter to announce their divorce. Divorce is always challenging for couples but will be much more challenging for Jeff and MacKenzie since they are not only are in the public eye, but have a lot of assets at stake. Jeff is currently the world’s richest man with a net worth of approximately $136 billion, he owns 16 percent of Amazon, The Washington Post, at least six properties, and has stakes in multiple additional companies, all which will need to be divided up between him and his soon to be ex-wife.

The Bezos divorce had already sent tabloids into a frenzy, but TMZ’s announcement that Jeff and MacKenzie do not have a prenuptial agreement really made things interesting. A prenuptial agreement (“prenup”) is a legally binding agreement that that is executed between two parties prior to their marriage and states how assets would be divided in the case of a divorce. Although a prenup may not be the most romantic topic to discuss before marriage, Jeff and MacKenzie’s current situation shows its importance. If there was a prenuptial agreement in place, the division of their massive fortune would already be handled on terms that they each agreed upon in the past, avoiding any messy negotiating. Now, Jeff Bezos may be in a position of having to pay his soon to be ex-wife alimony, which is a husband’s or wife’s court-ordered provision for a spouse after separation or divorce. Usually, prenuptial agreements are put in place to protect one of the spouses of having to pay the other alimony, due to the loss of assets that occur in a divorce.

Prenuptial AgreementsSo, what does it mean that the Bezos’ reportedly don’t have a prenup? In the United States, there are two main ways to divide martial property on a state by state basis: equitable distribution and community property. Courts in community property states generally divide all marital property equally between the two spouses. Community property means that all income received during a marriage, real or personal property acquired during a marriage with said income and debts acquired during a marriage are marital property. It does not matter whose name is on an ownership document, the couple owns all marital property together and splits everything 50/50 once the divorce becomes final.

On the other hand, courts in equitable distribution states, like North Carolina, are not required to split property equally, they split it fairly, which means one spouse could get more of the assets than the other spouse. Courts take both marital and separate property into account, duration of the marriage, value of each spouse’s contributions to the marriage along with other factors. Equitable distribution does not have any clear formula and can be quite complicated, but the goal is for each spouse to receive a fair share of property based upon a host of factors a court must consider. If you’re interested, those factors can be found in North Carolina General Statute Chapter 50-20.

The Bezos’ reside in Washington, which is one of the few states that utilizes the community property approach. Essentially, the $136 billion Bezos fortune could be split in half between Jeff and MacKenzie if they are not able to reach a settlement outside of court. Many times, couples will work to come to an agreement outside of court, but there is no guarantee that they will be able to do this! If the Bezos’ had a prenuptial agreement, their division of property wouldn’t be a question. Now, they will either have to go through a difficult and complicated process of dividing the marital fortune outside of court, or have it split 50/50 by the court. Let’s be honest, there isn’t much to negotiate if you know the courts are required to give you 50%, the only question would be what assets will you receive which amount to your 50%. Will McKenzie get the Washington Post or a percentage ownership in Amazon? Buckle-up. Jeff Bezos could very easily be knocked out of his spot of most wealthy man in the world.

Property Division in DivorceAs we mentioned above, North Carolina uses the equitable distribution approach for dividing marital property in a divorce. This means that we have an added wrinkle to the analysis when compared to a community property state. If the Bezos family resided in North Carolina, a court could find that it is fair (equitable) not to divide the assets 50/50 between them. So not only would they have to determine the value of their assets and debts, but then they must determine what constitutes “fair” in their distribution. That would be a very difficult and interesting negotiation. Theoretically, Jeff could end up keeping his ownership in Amazon, which isn’t going anywhere anytime soon, with Mackenzie getting everything else.

You may not have a $136 billion fortune to divide but protecting what is yours is just as important for each and every person contemplating marriage and/or going through a divorce. At Marcellino & Tyson, we understand matters of family and domestic law, from prenuptial agreements through equitable distribution. Family law issues are emotional and can affect multiple people in and areas of your life. We are here to help you through this challenging time and are committed to providing professional representation to protect you and your property.

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