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Lesson from the Bezos divorce: Protect your business interests

WEINER LAWInsightsFamily LawLesson from the Bezos divorce: Protect your business interests

Family Law Tuesday, February 5, 2019

Amazon founder and CEO Jeff Bezos recently announced his divorce from his wife of 25 years. Whether the owner of one of the highest valued businesses in the world or just getting a start-up going, this divorce provides a very important lesson to business owners — protect your business interests.

Since Bezos did not take steps to protect his business, it is very likely Amazon will be part of the divorce proceeding. Here is how it generally works:

  • Businesses started during a marriage are marital property. This is generally true unless the business owner takes steps to keep the business separate. One way to achieve this goal is to draft a post-nuptial agreement that specifically states the business interests are separate property.
  • Businesses that grow during a marriage can become marital property. There is a risk the business could become marital property if the business started out fairly small prior to the marriage and experienced substantial growth during the marriage. In the least, the court would likely require a valuation to determine the growth amount to consider during divorce negotiations. Business owners can avoid this by using a prenuptial agreement to outline the business and any resulting growth during the marriage remains separate.

In most cases, couples navigating divorce split all marital property. In some cases, this means couples will sell assets to ensure each party receives an agreed upon portion of marital property. Generally, the only way property is not taken into consideration is if it retains the designation of separate property or if legal tools are used to keep the property separate.