Had MacKenzie Bezos married and divorced Jeff Bezos in Germany, checking the “separate property” box on the marriage application, she would be getting no asset transfer, only child support that maxes out at $6,000 per child per year (see Real World Divorce‘s international chapter).
Had the divorce happened in California, she would have been entitled to 50 percent of the assets accumulated during the marriage, a total of about $72 billion.
The divorce occurred while the family courts of Washington State had jurisdiction, however, resulting in “MacKenzie Bezos’s $36 billion in Amazon stock from divorce settlement makes her world’s fourth-richest woman” (MarketWatch).
In the early articles on this subject, Washington was erroneously reported by many journalists as being a 50/50 property division state. In fact, as noted in 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.”
In other words, it is uncertain. A judge might have decided to give Mrs. Bezos more than 50 percent of the property, on the grounds that she hadn’t worked since 1997 and therefore wouldn’t be as easily able as Mr. Bezos to earn more money. Or a judge might have decided that $1 billion was the maximum profit that someone should be able to obtain from being a stay-at-home spouse. There wouldn’t have been any precedent for these numbers.
It would appear that a certain $36 billion was preferred by Mrs. Bezos to the possibility of obtaining $72 billion or more, but with a small risk of getting much less than $36 billion. Thus, she settled, and, assuming that she was most likely to come away with $72 billion, we can say that the price of the uncertainty that the Washington State Legislature built into the family law system was $36 billion.
Generally I think it is more important for ordinary people to learn about more ordinary applications of family law, but the MacKenzie Bezos story is interesting as an illustration of the strange characteristic of U.S. family law. Marriage is primarily a financial partnership in the eyes of the law and yet, in most states, the value of an individual’s stake in the partnership is unknown and unknowable without spending potentially all of the partnership value on years of litigation. It is kind the opposite of all other American business partnerships where the value is supposed to be readily ascertained at any time and litigation is a rare last resort if something has gone badly wrong.
This uncertainty is fundamentally contrary to the principle of Rule of Law. Sometimes I hear people argue that it is a good thing for judges to have a lot of discretion. But then we have rule by the whim of judges, not a predictable rule of law.
This is an astute observation, that it is difficult to predict the upshot of divorce litigation in advance since the rules are unclear — a very weird idea that you enter into a partnership without knowing who gets what if the partnership dissolves. So cui bono? The various characters who profit from uncertainty — the lawyers who litigate, the judges who dish out assets that are not theirs, the various experts and the people with nice government jobs, pensions and benefits, rather than $9 an hour as a security guard at Walmart. The losers are the litigants, generally the more well to do spouse who will end up funding the whole thing. The less well to do spouse who cashes out will lose down the road but that is another topic. Phil is right that ordinary people should learn more about family law — but no one thinks it will happen to them, their spouse married them for love not money because they are special & the matrimonial part is a place for someone else.
It was funny how the stock market analysts declared losing 25% of his fortune a victory for Jeff, while 40 years ago it would have been considered a defeat. It just shows how every analyst has now been divorced & lost a lot more.
NBC Nightly News aired someone who said that she left all this money on the table. Apparently the great fact checkers we are supposed to trust with their totally objective news were unable to learn that Washington is not a 50/50 state, a fact known to Real World Divorce readers.
Alternatively, maybe she just wanted to get it out of the way with a minimum of fuss? She’s never going to spend more than $1 billion and it takes demonic levels of greed to put up with vicious litigation over money you will never use. Certainly plenty of women are that greedy, but perhaps Mrs. Bezos is not.