On January 9, Jeff Bezos, founder, and CEO of Amazon, and his wife MacKenzie announced their decision to divorce after 25 years of marriage. In the wake of their announcement, the news media began speculating about the future of Amazon. Having grown Amazon into one of the largest retailers in the world, the value of Bezos’ ownership in the company has made him the richest man in the world. The main issue driving fear with the future of the company is ownership. Amazon was started during the Bezos’ marriage and the couple did not have an agreement in place dealing with the company’s ownership.
Much of the ensuing media speculation focused on the CEO’s future role in Amazon, in light of the distinct possibility that Bezos’ divorce could dramatically reduce his stake in the company while simultaneously handing MacKenzie Bezos, one of the most substantial ownership interests that an individual could have in the company. The likely event is that Jeff’s ownership share of the company will be reduced significantly, causing major havoc.
Despite being the business owner of one of the world’s largest retail enterprises in history, Bezos’ predicament is something he has in common with many other married business owners. This article discusses how divorce can threaten one’s business interests, and how a prenuptial agreement – or even a postnuptial agreement made during marriage – can be the perfect solution to avoid legal problems in the future.
Asset Division in a Divorce
While some states in America distribute assets according to “community property” principles, which means all community assets are spilt 50/50, most states divide assets according to the rules of “equitable distribution.” Marital assets are distributed between the spouses in a divorce through the concept of equitable distribution in the state of Pennsylvania.
Community Property. According to community property principles, all property and assets that are acquired during marriage are considered community property. Assets that are required before marriage or after separation are the separate property of the acquiring spouse. Community property assets are divided equally between spouses upon divorce.
Equitable Distribution. In an equitable distribution state, like Pennsylvania, assets and property that a married couple acquires during marriage is considered to be marital property. However, instead of an equal 50/50 split, equitable distribution principles say that marital assets are to be distributed “equitably” depending on certain factors.
Pennsylvania courts will consider the following factors when determining the equitable division of marital assets:
- The marriage’s length
- Prior marriages of either party
- The age, health, wealth, and employability of each party
- The contribution by one party to the education of the other party
- The opportunity each party has to acquire future wealth
- Each party’s income sources
- Each party’s relative contribution to the acquisition of marital property
- The value of the property set apart to each party
- The standard of living the couple enjoyed while married
- The economic circumstances of each party at the time assets are divided
- Tax consequences of dividing assets
- The cost of selling, transferring or liquidating assets
- The extent of a party’s custody over their minor children
Equitable distribution states allow spouses to predetermine property, legal rights, and claims for support during the marriage as well as alimony rights, in case of a divorce through a written agreement. A premarital agreement – also known as a prenuptial agreement or “prenup” – serves as a valid basis for re-characterizing a particular asset as a spouse’s separate property, effectively removing it from division at divorce. Even if you are currently married and agree with your spouse on allocation, in order to avoid Jeff’s problem, an experienced family law attorney can draft a postnuptial agreement.
Although marital agreements can be a point of contention between prospective newlyweds or current spouses, creating these agreement can help save money on attorney’s fees in the unfortunate event that a couple ultimately decides to get a divorce. Pre and post marital agreements also provide couples an opportunity to discuss their expectations about their respective financial responsibilities during the marriage, as well as their financial goals. Often this has a positive impact on post separation custody as divorces are most often less contentious if the dollars and cents of a divorce are settled.
Consult an Experienced Harrisburg Divorce Attorney
If you are a business owner considering the benefits of a marital agreement, you should discuss the subject with a Harrisburg divorce attorney with an intimate understanding of Pennsylvania family law. At The Law Office of Jason R. Carpenter, our legal team, led by Attorney Jason Carpenter, has years of experience handling a variety of family law issues, including prenuptial or postnuptial agreements and property division upon divorce. Families in Harrisburg have grown to trust our ability to provide them with effective and thorough legal advice and advocacy, and so can you.
To schedule a free initial consultation with our skilled divorce attorney, call The Law Offices of Jason R. Carpenter at (717) 537-0928 or contact us online today.