‘Divorce Monday’ was busy again this year, which is something we have come to expect.
What’s Divorce Monday, I hear you ask?
It’s the first Monday back at work after the Christmas holidays. Precious holiday ‘together time’ invariably pushes many couples to the point of no return.
In 2019 though, there was something different. Every new client had a comment to make about Jeff Bezos and his wife Mackenzie – as if they knew them personally.
Mr and Mrs Bezos (or Mr and Mrs Amazon or Mr ‘Richest Man in the World’ and his wife) announced their impending divorce around the time of Divorce Monday in 2019. Suddenly, Mr and Mrs Bezos were just like every other couple consulting a family lawyer after Christmas. Suddenly, they were just like us … except they were worth $190 Billion USD.
Family law doesn’t discriminate
That is one of the unique things about family law and family separation. It doesn’t matter how educated you are, how many children you have, or how wealthy you are; the emotional impact of separation doesn’t discriminate.
Anger, fear, loneliness, hurt – these are emotions we all experience at separation. That is why, when Jeff and Mackenzie Bezos announced their separation, those of us who work in family law or who have experienced separation felt like we knew them. Or, at least, knew what they were going through.
But the Bezos family isn’t like the rest of us. Their family wealth is almost impossible to comprehend. I recently heard that, together, Jeff and Mackenzie Bezos own more property in the United States than any other person.
This got me thinking. If the Bezos family with their incredible wealth had separated in Australia, would the process of working out their property settlement be any different from working out a settlement for you, or your next door neighbour or that mischievous cousin with commitment issues?
The answer, really, is no.
How to work out your property settlement
Working out how, legally, the property that parties have accumulated before and during their relationship should be divided is the same in Australia, regardless of how much or how little couples have.
Naturally, the more complicated the asset structure, the more complicated any court order or agreement will need to be. There is more to consider when finalising separation, which may include corporate issues or complex tax and trust structures.
But the basic questions the parties will ask themselves to determine how to divide their assets will be the same, regardless of the extent of their joint or separate wealth.
Questions to consider
What are the things you need to consider then, when working out how to determine what an equitable property settlement will be? It’s a five stage process:
First, determine whether it is just and equitable to adjust either party’s property interests. This isn’t as easy as it might sound. Just being married or being in a de facto relationship does not mean you are automatically entitled to a share of your spouse or partner’s assets. I call this step – ‘Should we get involved?’
The second step involves calculating the asset pool – I call this, ‘What have you got?’. At this point, the values of all the assets owned by the parties (separately or jointly) are totalled and then reduced by the total of all liabilities. This produces a net figure, often called ‘the property pool’. This step might be easy to determine, if there are limited assets, or take months (even years) where there are complicated business or trust structures.
The third step involves assessing the parties’ respective contributions to those assets – I call this, ‘What did you do?’. There are several types of contributions the Federal Circuit and Family Court recognises. These include direct and indirect financial contributions, non-financial contributions and contributions made by each party to the welfare of the family.
The fourth step is to consider each party’s future needs – I call this step, ‘What do you need?’. In this step, the Court considers various matters, including the respective ages, health, income, property and financial resources of each party and whether either of them has superannuation or other benefits available.
The fifth and final step requires the Court to assess whether the overall outcome is just and equitable – or, as I call it, ‘Did we get it right?’. This is where the parties need to consider issues like whether they have reached an agreement that balances the parties’ respective access to cash assets, property and superannuation and if the overall division is equitable.
So, the more complicated the financial structures, the more complex the needs of any children, whether a business was started before or during a relationship, the length of the relationship, whether someone won the lotto or received an inheritance or had a gambling problem – these all impact on how the property pool will be divided.
While Jeff and Mackenzie Benzos may have had more wealth than almost anyone else on the planet, that doesn’t mean the process of working out how to divide that wealth is any different from how we would approach separation for you.
As with all business owners or investors experiencing separation, Jeff and Mackenzie will have to consider how best to ensure stability when running companies and maintain shareholder confidence. As with all parents experiencing separation, they will have to navigate how to tell their children they are divorcing and how to manage their reactions.
On Divorce Monday it seemed reassuring to many clients that Jeff and Mackenzie Bezos are just like the rest of us.