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A Sensible Split

person impressing a seal on a certificate of divorce, while two others watch, wedding rings resting nearby.

We hear the term “amicable divorce” a lot, and my guess has always been that we hear the term more often than it really applies.

Humans being what we are, even a purely business partnership is not easily dissolved on friendly terms. That’s why my colleagues and I recommend detailed partnership agreements that spell out how the partners can go their separate ways. So when it comes to stories of romance that begin with “happily ever after” but actually end sometime short of “ever,” it is an accomplishment when a breakup can be called civil, let alone amicable. That is why we also often recommend prenuptial contracts, which are the marriage counterpart of the business partnership agreement.

By all accounts, Jeff and Mackenzie Bezos did not have a prenup. When they got married 25 years ago, neither they nor anyone else could have known that he would build the world’s largest personal fortune – or, really, that they would do it together, since they live in the community property state of Washington. By default, wealth accumulated during marriage in a community property state belongs 50 percent to each partner, regardless of who personally earned the money.

So when news broke early this year that the Bezos marriage was ending, there was much speculation about the implications for Amazon, which is the source of their great wealth but not their sole business interest. Jeff Bezos bought The Washington Post several years ago and also is the founder of rocket company Blue Origin.

Mackenzie Bezos probably could have made the divorce spectacularly unpleasant, if not disruptive, had she wished. And given the nasty personal publicity that followed shortly after she and her husband announced their separation, it would not have come as much of a surprise if she had wished. But evidently she didn’t.

Last week, the couple announced what some will call an amicable settlement. Mackenzie Bezos will keep one-quarter of the couple’s Amazon shares, but will cede voting control of those shares to Jeff Bezos. This will leave him with control of roughly 16% of the publicly traded company, enough to assure there will be no threat to his position as long as Amazon continues to prosper under his leadership. Jeff Bezos will also keep the Post and Blue Origin. Nothing else was said about their division of property, and Jeff Bezos referred to their future relationship as “friends and co-parents” of their four teenage children.

In our line of work, financial planners inevitably deal with couples whose marital problems disastrously bleed into their financial and child-rearing affairs. It can be very difficult to navigate and excruciating to watch. Sometimes we can help guide people to a practical outcome and sometimes we can’t, but if invited to do so we always give it our best shot.

So I afford considerable respect to people who have the maturity and discipline to end their marriages in a sensible, businesslike fashion. I have no idea how friendly Jeff and Mackenzie Bezos actually are in private, and of course it is none of my business. Their children, as well as their reputations, surely benefit from their not publicly trying to tear one another down.

In fact, the soon-to-be-former Mrs. Bezos gives an implicit vote of confidence to her ex by allowing him to vote her Amazon shares and, thus, ratifying his leadership of the company. It is not clear who else, if anyone, could have built Amazon into the globe-spanning enterprise it is today, or who could lead it better going forward.

We don’t know from the couple’s public statements whether Mackenzie Bezos has surrendered her right to sell her shares on the public market. But that right is more apparent than real, regardless. Her 4% stake in the company is so large that diversifying out of it without depressing the stock price would likely be a costly and time-consuming process, and that is before considering the impact of capital gains taxes. Her shares are currently valued at more than $35 billion.

From what we can tell, the pending Bezos divorce seems about as amicable as any. Whether this appearance matches reality is something we may not know for a long time, if ever. In any event, it is certainly a sensible way to split up.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us” and Chapter 4, “The Family Business."

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