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Bezos divorce: How Washington's 'community property' will divide the assets of world's richest man

Analysis: The settlement between the world's richest man and his wife will be decided using the "community property" to divorce law.
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Amazon CEO Jeff Bezos announced this week that he and his wife MacKenzie are seeking a divorce. The two were married in 1993 and have four children. Bezos founded the company in 1994, just after his marriage.

Bezos is considered to be the world's richest man, with an estimated worth of $147 billion. He also reportedly did not have a prenuptial agreement with MacKenzie. That means, following his divorce, his wife could become one of the world’s richest women.

There are two main approaches to dividing up marital property in the United States: “equitable division” and “community property.”

Most states utilize the common law, “equitable distribution” approach, where the default position is that each spouse holds their property during the marriage separately.

In New York, for example, when both spouses equally contribute to a long marriage, the courts attempt to divide property equally. However, equitable distribution does not necessarily mean equal distribution. Equitable distribution views marriage as an economic partnership to which both parties contribute as spouse, parent, wage earner or homemaker.

The distribution of assets depends not just on the financial contribution of each spouse, but also on a wide range of unpaid services to the partnership, such as homemaking, raising children and providing the emotional support to sustain the other spouse at work.

Washington, where Bezos and his estranged wife reside, is one of a handful of states that utilize the “community property” approach. Each spouse has an interest in the community property, and there is no separate spousal property. All property acquired after the date of the marriage is presumptively community property, regardless of how it is treated during the marriage. A spouse who wants to overcome this presumption has the burden of showing by clear and convincing proof that a specific piece of property falls within an exception to the rule.

Washington courts may not consider any allegations of marital misconduct when distributing property. That means that a spouse’s “immoral or physically abusive conduct within the marital relationship” will not generally affect the distribution by the court.

The real challenge in the Bezos case may not be for the couple; it may be for the court, which is required to somehow value the marital property. A Washington trial court that inherits the Bezos case has to value the assets of a couple whose net worth reportedly exceeds that of Iceland, Tunisia, Jamaica and Estonia combined, all while an understaffed court manages the rest of its overflowing docket.

The ultimate objective of the court is not mathematical precision, but fairness. Especially in a marriage of 25 years or more, like the Bezos one, a court’s objective is to place the parties in “roughly equal financial positions for the rest of their lives.”