Bill and Melinda Gates’ Divorce: Why Timing is Important for Separation Agreements in Complex High Net Worth Divorces

When Bill and Melinda Gates announced their divorce, it was not long after the divorce of Jeff Bezos and MacKenzie Scott in 2020. The Bezos divorce shared some things in common with the Gates’ divorce. Both divorces were unprecedented high asset divorces with the fortunes of the world’s richest tech billionaires at stake. Also, both divorces lacked a prenup. 

Melinda Gates explained that the couple had been working on drafting a separation agreement since 2019. A separation agreement in Massachusetts is an agreement submitted to the court on all issues related to your divorce, including custody, child support, alimony, property division and other issues. The court will then review your agreement in conjunction with you and your spouses’ financial statement to look for any conflicting terms and also to make a determination about whether your agreement is fair and reasonable. If the court is able to find that your separation agreement is fair and reasonable the agreement will be approved by the court and become your judgment of divorce. 

Many people assume the marital separation agreement is “par for the course,” and will be accepted by a judge as part of the divorce if the couple is in agreement. It is not common for a judge to reject a marital separation agreement. This happens most often where there is an unequal division of the marital estate, where there are not adequate child support or alimony provisions or where key terms are missing from the agreement. 

Massachusetts is an equitable division, not a “community property” state like Seattle, where the Gates’ got divorced and property is divided 50/50. This means in Massachusetts, the property division at divorce should reflect each party’s contribution to the marriage – an example being a stay-at-home mom who looked after the kids while her husband was building up a business. A  separation agreement must be entered into with both parties’ full consent and neither party under duress. A judge would be more likely to look at parties’ access to attorneys if they were examining When spouses are filing an uncontested no-fault divorce in Massachusetts, they often hire a mediator to help them work towards a resolution and consult with separate attorneys while going through the process so that they are full aware of their rights and can make informed decisions about their futures.

For high net worth couples with more complex assets, working on a separation agreement may be a significant undertaking. Divorcing spouses may want to begin working out the details of their property division many months or even years before filing for a divorce. However, there are downsides to this. There can be issues with timing, taxes and potential market fluctuations that may impact the values of the assets being divided. A good divorce attorney will work with you and your financial advisers to ensure you are making the best decisions about dividing your assets. 

An example of a difficult asset to divide is bitcoin. Some assets are more volatile than others and cryptocurrency fluctuates wildly. Bitcoin has just sunk by 8 percent after a statement by China on cracking down on mining and trading. If your divorce separation agreement is taking a long time to draft, your cryptocurrency assets might not be the first thing you decide to divide or you may not want to trade other more stable assets for an asset like bitcoin, which can be incredibly volatile. The Gates divorce is substantially different from the Bezos divorce, when it comes to the assets involved. Though more was at stake in the Bezos divorce, most of Jeff Bezos’ wealth was in Amazon stocks making the property division simpler. Bill Gates on the other hand has enormously diverse holdings, in companies, hotels and properties and is the biggest owner of farmland in the US. The longevity of their marriage and the diversity of their holdings may be a big factor in why it took the Gates much longer to decide on their property division than the Bezos divorce.

Additionally, when the marriage is much longer, as in the case of Bill and Melinda Gates, there may be a tendency for high net worth couples to become involved in charitable institutions like the famous Gates Foundation. The couple may also have estate plans and trusts in place for any children or beneficiaries. Another fact that emerged from the divorce is that Melinda Gates involved estate planning attorneys in the process. This may be part of an effort to update the Gates’ estate plan, which currently passes most of the couple’s wealth to charity, not to their children.

As noted, the separation agreement covers all aspects of a divorce, including assets, spousal support, and child custody and child support. The “best interests of the child” standard is taken very seriously by judges so divorcing couples have less room for flexibility in these matters, even if both are in agreement on what to do about minor children. 

When you draft and submit a separation agreement in Massachusetts as part of a complex, no-fault uncontested divorce, there is a period before it is accepted where the separation agreement is considered a “legally binding contract.” When it is accepted by a judge it becomes both a legally binding contract and a court order. It’s important to recognize the period in which the separation agreement holds some sway though it hasn’t yet been recognized along with the judgement of divorce.

A good Massachusetts divorce attorney or mediator will guide high net worth couples through the long checklist of items to agree on, including assets, liabilities, trusts and other non-financial matters such as child custody. For a high net worth couple the list can be very long. Therefore it’s important to approach property division strategically and make decisions about dividing property that will stand not only at the time you decide, but at the time of divorce. If you are considering retaining a high net worth divorce attorney and want to understand all your options, then please call us at (978) 341-5040 for a consultation today. 

Image provided by: Kjetil Ree, CC BY-SA 3.0 https://creativecommons.org/licenses/by-sa/3.0, via Wikimedia Commons