“Alexa, what was the Most Expensive Divorce in History?”

couple fighting over money - Fremstad Law

Fox News founder Rupert Murdoch reportedly paid his second wife, Anna Maria Torv, a property settlement worth $1.7 billion. In the late 1990’s, New York socialite Jocelyn Wildenstein, known for her plastic surgery that made the tabloid press dub her the “cat lady,” received a settlement of reportedly $2.5 billion and then $100 million dollars a year for the next 13 years. Oil tycoon Harold Hamm famously wrote a divorce settlement check to his now ex-wife in 2012 for $974.8 million dollars.

Although it is still early in the year, 2019 may see a newly crowned “most expensive divorce in history.”  In January 2019, Amazon founder and CEO Jeff Bezos and his wife, McKenzie, announced that after 25 years of marriage they would be divorcing. Jeff Bezos has a current net worth of between $137 billion and $147 billion dollars. Statements put out by the couple suggest that their split will be amicable and friendly, despite Jeff Bezos reportedly already having a new girlfriend. 

Amazon was founded in 1994.  McKenzie and Jeff married in 1993.  Just how much in a property settlement will McKenzie Bezos receive in the couple’s divorce?  Washington state, where the couple resides, is a community property state.

This means that any interest that Jeff Bezos has in Amazon, including stock and any other assets of the couple such as cash or real estate acquired after 1993 are community property. In other words, McKenzie Bezos could, as a result of this divorce, acquire half of Jeff Bezos’ $137-$147 billion dollar fortune.  On the low end, McKenzie Bezos could receive $68 billion dollars and would become on her own, one of the richest women in the world.

How do equitable division states like North Dakota and community property states like Washington differ in how property is divided in a divorce? How would the Bezos’ property be divided if they lived in an equitable division state like North Dakota at the time of their divorce? 

Washington defines “community property” as “property not acquired or owned, as prescribed in RCW 26.16.010” (premarital property or that acquired by gift/inheritance) “and 26.16.020 (applicable to domestic partnerships)” that is “acquired after marriage or after registration of a state registered domestic partnership by either domestic partner or either husband or wife or both, is community property.” 

In North Dakota, on the other hand, “equitable” division of marital property does not necessarily always mean “equal”, but in long-term marriages, there is a presumption that a 50/50 division of property is the starting point and that 50/50 division is equitable.

Furthermore, in North Dakota divorces, unless the property is specifically excluded by a premarital agreement, there is a presumption that "all property held by either party, whether held jointly or individually, is to be considered marital property." Hitz v. Hitz, 2008 ND 58, ¶ 11, 746 N.W.2d 732. The court must include all assets and debts in the marital estate, wherever their origin and whether held jointly or individually to determine the total value of the marital estate. Courts in North Dakota "have never held that property brought into a marriage or acquired by gift or inheritance by one spouse be irrevocably set aside to that spouse." Id.

Once the total value of the marital estate is determined, the Court weighs the Ruff-Fischer guidelines in determining what is an "equitable" division. "Whether [the property was] accumulated before or after the marriage," as indicated above, is part of the consideration for the Court in who is awarded that particular item of property in the equitable division.

Other factors considered in the division of property and in awarding spousal support in North Dakota include the “conduct of the parties’ during the marriage.”  Under such considerations, evidence of an extramarital affair could come into play. 

Under Washington’s community property rules, however, marital misconduct and evidence of extramarital affairs is treated differently.

According to NBC News legal analyst Danny Cevallos:

Washington, where Bezos and his estranged wife reside, is one of a handful of states that utilize the “community property” approach. Each spouse has an interest in the community property, and there is no separate spousal property. All property acquired after the date of the marriage is presumptively community property, regardless of how it is treated during the marriage. A spouse who wants to overcome this presumption has the burden of showing by clear and convincing proof that a specific piece of property falls within an exception to the rule.

Washington courts may not consider any allegations of marital misconduct when distributing property. That means that a spouse’s “immoral or physically abusive conduct within the marital relationship” will not generally affect the distribution by the court.

Another issue facing the Bezos’ divorce in Washington may also be the gargantuan task of valuing a marital estate that size and coming up with a division of the Bezos’ assets that also does not diminish the overall value of their stake in Amazon as a company. If, for example, Jeff Bezos had to sell off a large amount of his Amazon stock to pay McKenzie Bezos’ divorce settlement, the overall net worth of both parties could decline.  Bezos currently owns approximately 16.4 percent of the company.  The Bezos’ overall net worth and the overall value of the stock is thought to be directly tied to Jeff Bezos’ controlling stake in the company.  Some have speculated that as a result, McKenzie Bezos is unlikely to push for a divorce settlement payment that diminishes the value or Jeff Bezos’ control of Amazon.  There may be some sort of settlement that makes a significant cash payment to McKenzie Besos, pays her over a period of years, or the Bezos may have to liquidate some of their real estate holdings or other assets.

Similar to how the Washington court in the Bezos divorce may not want to force liquidation of likely the couple’s largest asset, in North Dakota, courts have also allowed for cash property equalization payments, liquidation of other assets and payment of cash plus interest over a period of years from one spouse to another to preserve family farming operations, often the largest asset of many divorcing couples in North Dakota.

For more information on the equitable division of property in North Dakota divorces or on how marital assets are divided in a North Dakota divorce, contact Lesley Foss at lesley@fremstadlaw.com or (701) 478-7620.