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What Australians can learn from the Amicable Amazon Split


Divorce Asset Split

Over the last couple of weeks, it is been widely reported in entertainment and financial media news sources that the CEO of Amazon, Jeff Bezos, who is the world’s richest person with a fortune valued at USD $137 billion, and his wife, Mackenzie Bezos, finalised their divorce, separating after 25 years of marriage.

It is important to remember when reading articles about the former Mr and Mrs Bezos’ separation that they are from the United States of America, and the law relating to divorce is quite different to “divorce” law in Australia (formally called family law). Indeed, in the USA, divorce law is state based, where Australian family law is Commonwealth law and applies to the whole country, except for Western Australia.

The divorce of Mr and Mrs Bezos was pursuant to the laws of the state of Washington, USA. The law states, in simple terms, that unless the parties have a prenuptial agreement (the equivalent of a financial agreement in Australia), the total value of all their net assets made through the marriage is split 50-50 upon divorce. Therefore, regardless of what Mrs Bezos held or what she contributed to Amazon and Mr Bezos’ wealth, she would be entitled to 50% of the total value of everything they had together, unless a court determines otherwise based on particular circumstance of the case.

This is very different to what occurs under Australian family law, for the following reasons:

  • You can determine your property settlement before getting a divorce as you cannot apply for a divorce to officially the marriage until you have been separated for 12 months or more.
  • When determining a property settlement, there is no set percentage of how the net assets are to be divided. Instead, the settlement is determined on a case by case basis, taking into account the value of the net assets and what each party contributed to the current net assets by way of:
    • What assets they each had at the beginning of the marriage;
    • What they financially contributed during the marriage;
    • What they contributed non financially during the marriage;
    • What they contributed to the parenting and home maker duties during the marriage;
    • What contributions were made to the assets post separation; and
    • What the needs are of each of the parties.

Notwithstanding these differences, there are 3 key things that couples going through a separation in Australia can take away from Mr and Mrs Bezos’ divorce. They are:
 

  • Both Australia and Washington, USA have a “no fault” system. This means despite who or what caused the parties to separate, neither party is considered at fault or benefits from the alleged wrong-doing of the other.
  • Mr and Mrs Bezos allegedly separated in January 2019 and had their financial statement agreed and finalised by the beginning of April 2019. Also, social media has displayed posts by Mr Bezos and Mrs Bezos touting their “amicable separation” and that they look forward to being friends and co-parents in the future. Also, despite the law stating Mrs Bezos was entitled to 50% of the net assets, she is understood to have settled for 25% (which still results in her being a billionaire).

    The cynic might say this a media stunt. However, to finalise a property settlement so quickly requires both people having a mutual respect for one another, listening to one another, compromise, and keeping the big picture in mind. These are important things for all separating couples to remember when finalising their property settlement. Separation is often the most difficult thing people encounter, but by having the right attitude, you afford yourself immense emotional and financial benefits.

  • It is difficult to work out how to divide (by any percentage) the millions or billions of dollars’ worth of property held by a party or parties to a marriage. In the Bezos’ case, whilst they are extremely wealthy, most of their wealth is tied up in corporate structures that involve shareholders and other non-liquid assets. That is, Mr Bezos cannot simply go to the bank and transfer a sum of cash to Mrs Bezos in order for her to receive her share of the property pool. The parties will need to engage financial advisors and accountants to value their assets, and to determine how the assets can be broken down. In many cases, especially where the parties have had a long marriage, and therefore relatively equal contributions, most of the time determining the property settlement is taken up by determining the value of the property and how it can be practically divided, rather than time spent arguing over contributions to the property.

If you need assistance in negotiating and finalising your property division with your former spouse or partner, contact Armstrong Legal for specialist advice on 1300 168 676.

Image Credit – lightwise © 123RF.com

Written by Bree Staines on April 16, 2019

Bree has a long held passion for family law, as she believes the law can be a mechanism to achieve positive and just change and resolutions for her clients. The diligence Bree puts into her work ensures she is always has a comprehensive understanding of the law and will be striving to achieve her client's goals, both efficiently and cost effectively. View Bree's profile


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