Insights for High Asset Clients
MacKenzie Scott, a novelist and philanthropist who was formerly married to Amazon founder Jeff Bezos, has become a beacon of transformative philanthropy following her highly publicized divorce in 2019 after 25 years of marriage to the Amazon founder. Her remarkable approach to giving away her substantial wealth has not only set a new standard but also inspired other ultra-rich individuals, including Melinda French Gates, to consider how they might impact the world post-divorce. Their actions demonstrate that wealth can be a powerful tool for social change and that personal transitions can lead to renewed commitments to the public good even in the face of an emotionally charged life event like a divorce. Specifically, how assets and debts are divided between spouses, focusing on the tax implications and future financial planning for a spouse, can ensure that their amassed wealth can be utilized strategically and philanthropically if that is a personal goal.
Equitable distribution is the legal process by which marital property and debts are divided between spouse’s incident to their separation and eventual divorce. In North Carolina (as well as other states) there is a presumption that an equal split (50/50) is equitable. However, there are factors that the Court can consider in providing a spouse a greater portion of the marital estate, if it determines that is a fair and just distribution based upon the facts of the case. These factors include the length of the marriage, the income and property brought to the marriage by each spouse, the health and age of the spouses, and contributions as homemakers, among others. For high asset clients, the stakes in equitable distribution are significantly higher, requiring meticulous attention to detail and strategic planning.
High-asset divorces often involve complex assets such as businesses, stock portfolios, real estate, and intellectual property. Accurate valuation of these assets is crucial. Engaging financial experts, including forensic accountants and business valuators, will likely be required as part of this process. In addition, understanding the tax implications of the asset division is essential to avoid unnecessary financial burdens post-divorce. Proper post-divorce tax and financial planning ensures that the standard of living can be maintained and continued philanthropic, or business endeavors can be pursued. Last, high-profile individuals may need to take steps to protect their privacy during their separation and divorce process. Private mediation and confidential agreements can help keep personal financial details out of the public eye.
As an example, when MacKenzie Scott and Jeff Bezos divorced in 2019, the settlement left Scott with 4% of Amazon’s stock, valued at around $36 billion. This stock and significant wealth was part of a division of marital property that the couple included in their Separation Agreement, resolving their divorce matters in a confidential manner. Instead of retreating from the public eye or focusing solely on personal endeavors, Scott made a bold commitment to philanthropy after her separation from Jeff Bezos. She signed the Giving Pledge, promising to donate the majority of her wealth to charitable causes within her lifetime. Scott is noted for stating, “I’m not stopping until the safe is empty.” This decision marked the beginning of a philanthropic journey that would revolutionize the sector. According to her website, “Yield Giving”, Scott has donated $17.3 billion to 2,300+ non-profit organizations thus far.
Melinda French Gates, who divorced Microsoft co-founder Bill Gates in 2021, is another ultra-rich individual poised to make a significant impact through post-divorce philanthropy. During their marriage, the Gates Foundation became one of the largest private charitable foundations in the world, focusing on global health, education, and poverty alleviation. Post-divorce, French Gates has continued to emphasize her commitment to philanthropy. It is estimated that French Gates’s net worth is approximately $11.1 billion post-divorce, according to Forbes. These assets were received as part of the divorce settlement and provided French Gates with at least $5 billion in stock from various companies, as well as another $5 billion in other assets. French Gates has revealed that when she steps down from her role at the Gates Foundation in June of this year, her focus at Pivotal Philanthropies Foundation, a nonprofit organization founded in 2022, will be to accelerate the pace of social progress. She intends to use her amassed wealth to expand equality and opportunity, especially for women.
Both Scott and French Gates have demonstrated a clear, independent vision for their philanthropy post-divorce. While Scott’s approach is characterized by rapid, large-scale giving with a focus on equity, French Gates is expected to continue her work on issues such as gender equality and women’s empowerment through her foundation. Both women have shown a strong commitment to empowering women and girls worldwide. French Gates has long been an advocate for women’s rights, and her post-divorce philanthropy is likely to continue emphasizing these issues, building on the foundation laid during her marriage. The high-profile giving of Scott and French Gates serves as an inspiration to other wealthy individuals, particularly women who find themselves in control of vast resources post-divorce.
The equitable distribution of marital assets can be a complex process, particularly for high-asset clients. By understanding the principles of equitable distribution and employing the right strategies and experts, individuals can navigate their divorce proceedings more effectively and secure a fair share of the marital estate. This, in turn, enables them to move forward with their lives, whether that involves continued business ventures, personal growth, or transformative philanthropy, as exemplified by MacKenzie Scott and Melinda French Gates.
By consulting with an attorney at Sodoma Law, P.C., an individual will receive the support needed through this challenging process in a knowledgeable and detail-oriented fashion with the assistance of our network of professionals in the areas of tax, financial and estate planning, real estate, etc. to develop the best arguments in Court or terms of settlement.
