What Jeff And MacKenzie Bezos (And All High-Net-Worth Couples) Need To Do To Avoid A Messy Divorce
By: Heather L. Locus - March 04, 2019
Out of the gate, Jeff and MacKenzie Bezos seem to be making all the right strides: jointly announcing their decision to divorce after exploration and separation with a vision of a wonderful shared new life as parents, partners and individuals.
While this may seem like a blissful vision, there will certainly be obstacles that this astute billionaire couple is aware they will face. How they overcome the hurdles will determine if they reach the home stretch in a graceful photo finish, and minimize the impact on company shareholders.
When wealth is involved in divorce, the complexity is high. The following are crucial steps that can help every couple in a high net worth divorce manage the difficulties that lie ahead.
Have Laser-Focused Priorities
Juggling high profiles from a successful company, wealth, real estate, a new rumored significant other also going through a divorce, philanthropic initiatives and four teenagers, the Bezoses have made it clear in the press they are focused on creating an amicable split and future. A smart move that will reap many benefits personally and professionally. While theirs is the extreme in terms of profile and dollar signs, most high net worth divorces include similar themes of all these dynamics in their own community.
What are your most important goals? No one gets everything they want in divorce. Most divorced individuals would say they only got a few things they really, really wanted at best. As difficult as it was to navigate demanding career(s) and a family before, divorce will increase it exponentially.
Laser focus on the healthiest restructuring of your family while maintaining excellent performance at work is a winning strategy for both spouses. Be proactive; make sure you control the message and the appropriate announcement of your new direction in the appropriate forums.
Limit the impact of divorce at work by avoiding serving legal papers at the office or creating any watercooler talk at events.
Try to maintain business as usual in your social life and community involvement as well. If you and your soon to be former spouse can avoid negative talk about the divorce and each other, those around you will as well. If you both attend school, work, and social functions without conflict, you and your children will remain on preferred guest lists. Picture the life you want, be diligent in your execution to reach it and flexible as life evolves.
Create Your Team
Regardless of your professional profile and net worth, you will be making some of the most difficult and important financial decisions of your life during an emotionally chaotic time. You need a team of professionals to help you balance the legal, tax and financial aspects with the emotional and family dynamics. Hire an attorney who specializes in family law with high net worth case experience splitting business interests, real estate, stock options, insurance and charitable trusts or any other complex investments you hold. The American Association of Matrimonial Lawyers is an excellent source to start your search and here is list of questions to ask. Your attorney will help you decide which process you will use to get divorced. There are three primary processes: mediation, collaborative or traditional litigation. Each has its benefits and drawbacks and selecting the right fit for your family’s unique interests could result in an enormous savings in the amount of time, cost, conflict and collateral damage involved - as well as privacy.
You will need experts to guide you through the financial, tax and emotional aspects of divorce. You will likely need a CPA, Certified Divorce Financial Analyst, estate planning attorney, business valuation expert, therapist and potentially a child specialist and/or forensic accountant. It is critical that you become the CEO of this process - having the vision, hiring the best-fit team, creating the strategy, then letting them do their job.
Divorce Is Business
When you married your spouse you were likely focused on your feelings, family and celebration, but you also entered into a binding contract that day. Now you are entering into a lawsuit to terminate that contract. It’s important to acknowledge the emotions, but not make emotional decisions. Many high-net worth couples execute prenuptial or postnuptual agreements, but they are often challenged in divorce so they by no means guarantee a clean breakup. While it’s currently unclear whether the Bezoses signed either, the fact that Amazon was founded after their marriage, likely makes the company stock marital property subject to division.
While many CEOs try to keep the majority of their stock to maintain controlling interest of their company and transfer other marital assets to their spouse, this likely won’t be an option for Jeff Bezos given Amazon’s value. Understand common ways the distraction, stress and settlement of divorce affects CEOs as highlighted by professor David Larcker at Stanford's Graduate School of Business:
- Diminished concentration and energy of the CEO reducing productivity and execution
- Loss of control with potential transfer or forced sale of shares to comply with the divorce settlement
- Reduced influence over the organization impacting decisions on strategy and board governance
- Altered attitude towards risk - either risk-averse or risk-seeking
Each of these likely has a potential negative impact on the business and while not the norm, are not uncommon to result in early retirement or termination. The combination could significantly affect the company revenues, value and share price. While the impact is the largest when the CEO is divorced, other C-Suite executives and high-level professionals can have similar effects. Don't let this happen to you!
Know When It’s Time To Settle
Divorce laws differ from state to state and sometimes are even implemented differently by various county judges. Be aware of the law and know what a court might do. Then focus on creating settlement negotiations in the way that will get you your top divorce priorities with as much grace and dignity as you can. Any overlap in reasonable ranges is a good place to end up. Focusing on arriving at an agreement you can both live with is important as it will significantly reduce the chance you will be back in court for post-divorce issues and maintain your privacy. Your list of what you must have versus things that are nice to have will help. Understanding what those must-haves are for your spouse will assist you and your attorney in your negotiations as well. Have a solid and realistic settlement range in mind. Over time, you each will likely have a range you could live with. If your ranges overlap – even if it is a slight overlap – it’s most likely time to settle. Be aware that over 95% of divorces settle out of court because trials are public, very expensive and judges’ rulings are extremely unpredictable.
Taking The High Road Is The Best Way To Get There
While the financial complexities of the current richest man in the world divorcing the soon-to-be richest woman in the world are mind-numbing, navigating this high profile process with four teenagers will be heart wrenching at times. It's challenging for high new worth married couples to raise financially intelligent children with good self esteem. The difficulties of two households makes that significantly harder even in the most amicable divorces. There are few things anyone can control during a divorce, but two are your actions and attitude. Remember that your parenting and Marital Settlement Agreement (MSA) documents are only as good as they are legally enforceable. You want to make sure you fully understand what you are agreeing to, and that your settlement is livable and practical to implement. At some point, final decisions will have to be agreed upon and the way you handle yourself during this time will influence whether you set yourself up for a successful finish. How you co-parent and your integrity overall through the process will also send a powerful message to your children, influencing their values and whether you are invited their wedding and your grandchildren's births.
The entire world may not be watching you like it is scrutinizing the Bezoses, but it’s guaranteed that YOUR entire world is watching you. Your ultimate goal is to be able to put your divorce decree away and move on to create the next chapter of your lives. The Bezos intend to “see wonderful futures ahead” - and you should too.
Will you be proud of how you navigate your divorce?
Article Source: Forbes.com
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