Bezos vs Bezos: How the world's biggest divorce would play out under NZ law

Jeff Bezos has been married to his wife, Mackenzie Bezos, for 25 years. There are four children from the marriage.

He created Amazon from his garage back in 1994, and it’s now one of the world’s richest companies, with his 16 per cent slice the main source of his wealth – which gyrates with the stockmarket, but is today at US$140 billion ($208b), according to Forbes’ real-time wealth tracker).

While the Bezos’s divorce is happening in the US, there are seven lessons from it that apply equally under New Zealand law.

1. Trial separations common

The Bezoses claimed to be going through a “trial separation” in recent months. It is also common to see trial separations here. They normally occur when children are younger and are usually for a period of three to six months.

2. An affair is irrelevant to the division of property, but puts you on the back foot

It’s been alleged that Jeff Bezos had an affair while married.

Does that affect the relationship property split in New Zealand? No. New Zealand has a no-fault divorce environment which means an affair, or cheating, is irrelevant to the division of relationship property.

However, the party who has had an affair is normally on the back foot in negotiations, and also behind the eight-ball morally.

The effect of this can be like an unofficial points system when deciding who stays in the family home, for example, and other competing decisions.

3. A pre-nup must be updated

It has been reported that Jeff and Mackenzie Bezos did not have a Prenuptial Contracting Out Agreement (or “pre-nup”).

Such an agreement could have enabled Jeff Bezos to separate out some of his vast wealth from any agreement.

The prenup would have had to be updated over time to remain robust. On the other hand, the couple had four children, they were together for 25 years, and it is very unlikely such an agreement, in original form, would have survived a court challenge.

Such arrangements need to be kept current and take into account altered circumstances.

4. Only property acquired during relationship can be split 50:50

The couple live in Washington, which is a “community property” state. This means that all property and debts acquired during a marriage can be equally split – if no other agreement is negotiated.

Some commentators suggest that because she didn’t work significantly in the business, it is not right that Mackenzie Bezos can now have a 50 per cent split of the assets.

These pundits claim that each case should be decided on merit, that MacKenzie Bezos should get a decent proportion of his wealth, sure, but not half of it.

If this case were heard in New Zealand, the relationship property that was “used or acquired during the relationship” for the 25 years they were married (including Amazon), would certainly be divided 50/50.

5. Financial vs non-financial contributions: keep it simple

After Jeff and MacKenzie got married, they both gave up successful careers and a very comfortable lifestyle to move to the other side of America.

MacKenzie helped start the company. She was heavily involved with accounting, coming up with the company name, and even shipping early orders.

Brad Stone, a writer of a 2013 book about Jeff, interviewed employees who confirmed that MacKenzie wrote cheques and was significantly involved in accounts. There is a Wired profile from 1999 stating that she helped negotiate Amazon’s first freight contracts.

Moreover, when Stone’s book came out, MacKenzie herself wrote a review, saying “I worked for Jeff at D. E. Shaw, I was there when he wrote the business plan, and I worked with him and many others in the converted garage, the basement warehouse closet, the barbecue-scented offices, the Christmas-rush distribution centres, and the desk-filled conference rooms in the early years of Amazon’s history.”

In more recent times, MacKenzie Bezos has been able to pick up her writing career, and has looked after their children. The question is can you put a price on financial vs non-financial contributions? Why should bringing in a profit be more important than bringing up children? What value should you put on the writing career she put on hold?

The law when people split has to be simple, to allow people to move on in their lives and not be before the courts for years.

Jeff, I’m sure, would have had numerous advisers suggesting he get such a Prenuptial Agreement at various times. He seems to have chosen not to.

6. Open justice applies

Few cases involving high net worth people end up in the Family and higher courts in New Zealand. This may be because individuals want the fine details of their cases to remain confidential, and this is set out in the Relationship Property Agreement.

Few well-known people want their cases reported and discussed in media. The courts operate on an open justice basis, and the well-known people involved in relationship property cases are not entitled to name suppression. However, children’s names are usually protected by law.

7. Even the wealthiest don’t always follow advice

What other options did Jeff Bezos have to separate their wealth?

He could have entered into a Contracting Out Agreement during the marriage, “ring fencing” certain assets. He could have transferred assets to a trust or third party. Some wealth could have gone to charity or other family members.

This case shows that even the wealthiest person in the world seems not to have taken the advice of professionals. It highlights the default workings of the no-fault divorce system and the 50/50 division of property.

We don’t know what was said between the two of them, but open communication between parties avoids the need for divorce lawyers and courts. The other advantage of working your own way through separation is reduced stress, both for the adults involved, and their children. As years go by, that becomes a powerful benefit.

This article was first published in the New Zealand Herald.