Bezos divorce shows how people conflate community property with 50/50 division

“Jeff Bezos, World’s Richest Person, Announces Divorce After 25 Years Of Marriage” (Forbes):

The couple lives primarily in Washington State, which requires divorcing spouses to equitably divide “community property,” including all income generated during a marriage. “It seems very likely, if not 100% a certainty, that whatever Jeff Bezos has earned at Amazon has been community income,” says David Starks, a partner at the Seattle-based law firm McKinley Irvin.

If MacKenzie Bezos, 48, does indeed receive half of her husband’s assets, she would be worth more than $68 billion, making her the fifth-richest person in the world.

The Forbes journalists pride themselves on precision, presumably, when it comes to what happens to $68 billion, yet here they conflate “community property” with “50/50 division”. Somehow Americans seem unable to educate themselves on family law, which may have far more impact on their spending power than choice of career, whether to attend college, etc.

From the Washington chapter of Real World Divorce

Are the assets split 50/50? “We’re a ‘fair and equitable’ state,” says DeVallance. “It is not a 50/50 state. The property division can be a disproportionate.” Does the fact that Washington State is a “community property” jurisdiction mean that assets acquired before the marriage remain with each party? “No,” explains DeVallance. “All property is before the court, including separate property, though it is somewhat rare to invade separate property.” DeVallance pointed to a November 25, 2013 appeals court decision in the divorce of Julian Calhoun and Christopher Larson (see http://www.courts.wa.gov/opinions/pdf/698338.pdf ). After a marriage that lasted more than 20 years, Calhoun won $139 million as her share of community property and more than $40 million from Larson’s separate property (stock in Microsoft acquired prior to the marriage):

According to the trial court, the separate property award served two objectives. First, it recognized Calhoun’s intangible contributions to the marital community. The court explained, “This was, after all, a long-term marriage in which the wife made a major contribution to all that the community accomplished, measured in terms of their children, their foster children, their impact in the broad community and their more narrow business interests.” … In other words, while Larson generated the couple’s considerable wealth, Calhoun’s intangible contributions served equally to benefit the marital community. Second, the award helped ensure Calhoun’s short- and long-term financial security. The court found that Calhoun held a college degree in English literature but was not “gainfully employed” during the marriage. Larson, in contrast, obtained significant employment and investment experience during the marriage. The court found he had a “keen business sense” and that, “[i]n recent years, he has stayed busy actively managing his extensive investments and philanthropic endeavors.” As between the two, Larson was in a better position to acquire and manage future wealth. … The $40 million separate property award—consisting of Microsoft stock and cash—provided Calhoun with immediate liquidity.

Calhoun’s request for attorney’s fees for the appeal portion of the lawsuit was unsuccessful, though not on the grounds that someone who has won $180 million in a divorce can afford to pay her own attorney.

Regarding our hypothetical scenario DeVallance says “On the basis that she is the primary parent she can ask for the house and may get it. She would receive a disproportionate share of community assets.”

[Mrs. Bezos is fortunate not to be living in Germany, where, assuming Mr. Bezos checked the “separate property” box on the marriage certificate application, she would be getting nothing more than child support (capped at $6,000 per year per child).]

6 thoughts on “Bezos divorce shows how people conflate community property with 50/50 division

  1. Germany? Well, yes, for almost all German marriages, what you wrote is true. Except that you usually don’t have to share what you already owned before the event. But in this case, that’s probably insignificant, as the wedding seems to have been celebrated around the time Amazon has been founded.

    But: when you file documents for marriage in Germany, you can choose an option to keep any accumulated property and profit separate. Then, a divorce is only about support.

    This is done very, very rarely. Mostly by rich, or very aspiring people. But Mr. Bezos, in Germany, might have had the foresight to choose that option. On the other side, if he was German, you would probably scratch your had now, what “Amazon” might stand for. A company in Brazil, perhaps.

  2. Oh, sorry, I should have read the last paragraph of your posting with a bit more attention. Yes, you had that correctly, already.

  3. Three pony rule is moot for sure in this divorce. Good luck to Bezos, who is involved with twice-divorced high maintenance gal who may or may not have precipitated this

  4. “Somehow Americans seem unable to educate themselves on family law” – Phil have you renounced your citizenship? or should this be ” Somehow, very few, Americans seem able to educate themselves on family law”?

  5. Of interest to your readers is how this will affect Blue Origin, now that his ex wife owns at least 50% of it & the money which was formerly earmarked to fund it. Is she going to decide this space stuff is stupid & drastically slow down the rate of spending? She’s absolutely, definitely not going to be putting her share of the $1 billion into it every year that Jeff was.

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