We go inside the the enormity, complication, and notoriety of the BEZOS PRE-NUP AGREEMENT with divorce attorney, MARILYN CHINITZ of BLANK ROME.

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Outline of the ISSUES INSIDE the BEZOS PRE-NUP

• General Concepts


• What happens without a pre-nup?


• Process for disclosing assets


• Previous marriages and those pre/post-nups?


• Community vs Equitable Distribution (Does the Pre-Nup contract this away?)


• Separate property


• Outside trusts?  Estate Planning?


• Pre-nup vs ultra high net worth pre-nup


• Financial Considerations (and Complication)


• Non-Financial- NDA, media activity, scope of negotiations, data and tech issues


• Let’s go through the General Fact Pattern


• High Profile


• Asymmetric Net Worths


• Kids?


• Which state is used for choice of law? Portability? 


• How do you make sure this has teeth?  (Coercion penalties)


• Spousal support / alimony?


• Escalator or sunset clauses?


• Disqualifying or  “infidelity” or “weight gain” clauses?


• What happens if children?


• Other constituencies – charities, businesses, political causes etc 


• Integration with estate documents, life insurance, other vehicles


• Is there a check-in every five years?


• What else can we learn from what is inside the Bezos Pre-Nup?

Transcript

Frazer Rice (00:02 .07) – Inside the Bezos Pre-Nup

Welcome aboard, Marilyn.

Marilyn Chinitz (00:04 .088)

Thank you, really nice to be here and nice to talk to you about what’s inside the Bezos Pre-Nup.

Frazer Rice (00:07 .541)

We sort of regaled ourselves with a mutual friend and we’re already, I feel like we’re already related. That’s right. So we’re going to talk a little bit about probably one of the highest profile marriages in the world that just happened with the Bezos Sanchez union and get inside the Bezos pre-Nup. But for just for a little bit here, let’s talk about what happens in a sort of family law divorce setting.

Marilyn Chinitz (00:13 .39)

Your best and glorious buddies are ready.

Frazer Rice (00:35 .232)

With general concepts because we’re going to be diving into some specifics with the case study here. What happens when something goes wrong and we have a divorce that happens without a prenup?

Marilyn Chinitz (00:46 .734)

So it depends what state you’re in. If you’re in a state like New York, then we have equitable distribution laws. If you’re in a state like community property in California, then those laws are very different. So if you have no prenup, and a lot of people don’t because they start their marriage with very little assets, and everything that you acquired during your marriage is now subject to a division.

Frazer Rice (00:49 .569)

Of course.

Marilyn Chinitz (01:15 .918)

And what happens is you start to trace the assets and you look at, what do I have? You look at homes that you purchase, real estate that you purchase, stocks, securities that you purchased. It doesn’t matter in whose name the asset is held. It’s a marital asset if it was acquired during the marriage and it was not gifted or inherited.

If you come into the marriage with assets and you have no prenuptial agreement and you keep those separate property assets clean, and I’ll explain what that means. When they go up in value because you actively caused their appreciation, they may be subject to a marital claim, the appreciation aspect. If you… have an asset that went up in value because of passive reasons and you kept that asset separate, it will remain separate property. So let’s talk about an example. If I owned a building before I got married and that building was worth five million dollars and then I get married and years later I get divorced, that building is now worth twenty million dollars.

It appreciated by 15 million. Did it appreciate because of market fluctuation, because the market went up, real estate did better? Or did it appreciate in value because I managed it, I collected the rent, I made sure the repairs were done, I made renovations to the building, and therefore it went up in value. If it went up in value during the marriage because I actively did something,

I renovated, I took care of the building, I managed the building. That appreciation from five million to 20 million is gonna be considered marital. Then the question is, what percentage does the other spouse get? Do they get 10 % of the appreciation or 50 % of the appreciation? If that asset went up because of market fluctuation, I sat back, I did nothing, the market went sky high.

Marilyn Chinitz (03:38 .905)

Then that property will remain separate property and the appreciation is separate. So you have to look at those different factors. But other than that, if you come into the marriage with no assets and you create a marital estate and you have no pre-nup, that marital estate is going to be divided. Now the question is, how is it going to be divided? If you’re in an equitable distribution state,

Frazer Rice (04:04 .907)

Right.

Marilyn Chinitz (04:08 .718)

What does that mean? It means what a particular judge feels in a particular courtroom on a particular day. What does equitable mean? It’s completely subjective. So did the other spouse take care of two, three children while you were managing that property? Did the other spouse work but supported you? Or did the other spouse do their own thing and had no real contribution? It’s very fact specific.

And if you can show that the spouse really contributed in a meaningful way while you were running your business or running your properties, I took care of the children, I took care of the home, I took care of you, then the court is likely to give you a more substantial percentage interest of that appreciation. And in New York, for example, equitable, and then we’ll talk about community, California, for example, generally,

Bank accounts, retirement accounts, stock security accounts are going to be divided pretty much 50-50. Where the court will not give 50-50 is if it’s a business. And then the court can go anywhere from 10%, 15%, 20%, up to maybe 40 % in unusual cases. What do those cases look like? They work together in the business.

They took care of things together. It’s very unusual for a court to give 40 % interest to the non-working spouse unless they were really actively involved in the business. Now, conversely, take California, which is a community property. When you get married and you acquire property in California, that’s 50-50 off the bat. Now, why does that become really important?

We’re seeing a lot of cases where people have really created a lot of wealth in their marriage and they are correctly and smartly putting some of that wealth into trust. They’re gifting it to a trust for their children. New York, for example, is a title state. A title state means if I own the asset during my marriage, I can sell it, I can gift it, I can do whatever I want with it.

Marilyn Chinitz (06:33 .718)

As long as there’s no divorce. If you are in a community property state, you can’t do that because that person, that spouse already owns 50%. It’s almost jointly owned. So you can’t give away a marital asset unless you cons