Amazon CEO Prime-ing Up for Divorce

By Kanika Ferency posted 02-18-2019 08:34

  

Jeff Bezos, the founder and CEO of Amazon, recently announced that he and his wife of 25 years, MacKenzie Bezos, are splitting. Bezos is currently the world’s richest person, with an estimated net worth of $136.2 billion. The announcement has raised many questions, including the possible division of assets and stocks. It was recently reported that the couple had neither a prenuptial agreement nor a postnuptial agreement. If the parties do not have some sort of agreement, the division of assets will likely be determined by a private mediator or by the court.

The standards of property awards differ depending on the jurisdiction. The Bezoses will likely file for divorce in Washington, where they reside and where Amazon is headquartered. Washington follows a community property theory. In community property states, any and all marital assets and debts are divided equally. But Michigan is an equitable distribution jurisdiction. If the couple were to file for divorce in Michigan, all of their marital assets and debt, which do not include their separate property, would be divided equitably.

Because the Bezoses are also Amazon’s largest shareholders, with roughly 16 percent, the pending divorce has created a frenzy among the company’s investors. The possible impacts to Amazon cannot be determined until some major questions are answered. For example, will MacKenzie sell her division of shareholdings, or will she want a seat on the board? I spoke with Shalini Nangia, partner at Jaffe Raitt Heuer & Weiss and frequent ICLE contributor, about how she would advise MacKenzie on obtaining a good settlement. She responded:

Mackenzie will have to recognize that Jeff’s share of Amazon will be difficult to value. Publicly traded stocks are easy to value, but not necessarily other assets of a business. Also, we will have to analyze how the value of the marital share would be affected if Jeff’s control is diminished by the terms of a settlement. A forced sale of stock or transfer to her could affect the stability of the business. Use of a constructive trust could alleviate these issues if she believes that having Jeff at the helm of Amazon is necessary to have the business grow. If both parties believe that Amazon will be successful with or without Jeff, then perhaps they would split the shares and move on to other ventures.

For more information about possible tax consequences of business and property division, please see chapters 15 and 18 of Michigan Family Law.

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