Stock holdings can be complex. However, things can become even more complicated when spouses who own stock in a company decide to get divorced.
Recently, Amazon founder and CEO, Jeff Bezos, and his wife, MacKenzie, announced their divorce. The two were recently named the wealthiest couple in the world with a net worth of nearly 140 billion dollars and over 16 percent ownership in Amazon stock. While Jeff is currently able to control the company, his soon-to-be ex-wife might be joining him on Amazon’s board of directors.
The Bezos divorce creates many questions for Amazon investors and divorcing couples across the country. Will Jeff buy out his wife’s shares in the company’s stock? Will MacKenzie want a seat on the company’s board? How can spouses work together managing a business after a divorce?
Generally, one spouse will buy out the other spouse’s half of the equity or the couple will split the holdings and work together to manage the business. These options typically work in the following ways:
Buyout: The most common way to divide interest in a business is for one spouse to buy the other spouse’s interest. In a company setting, this typically includes buying out the spouse’s shares. Generally, the selling spouse is given cash value for the number of shares he or she holds. It can be risky for the selling spouse if the value of the stock is expected to increase significantly over time. It is the opposite of when both spouses “sell out,” which occurs when the couple sells their holdings in a company to a third party and splits the money they receive in return. The shares in many businesses are frequently difficult to value, unless they are publicly traded.
Splitting shares: Say Jeff and MacKenzie decided to work together and divide their shares in Amazon equally, each spouse would receive 8 percent of the holdings in the company. This option might be preferable for couples who are able to remain amicable and both have a vested interest in the company. For couples that plan on working together, it might be helpful to consider a collaborative divorce process, which promotes open and respectful resolution of issues in a divorce.
Divorces can be complicated, especially if a business is involved. It can be beneficial to consult with an experienced divorce attorney to discuss your options and find an arrangement that is right for you.