Recently, Jeff Bezos and his wife, MacKenzie, announced via Twitter that they were going to divorce. Jeff Bezos is the founder of Amazon and is thought to be worth approximately $136 billion, making him one of the wealthiest men in the world. The public was soon shocked to learn that they did not have a prenuptial agreement. What does this mean for the Bezos’ divorce? Is it possible that MacKenzie could be left with nothing?
That scenario is not likely. Due to the fact that the Bezos’ live in Washington, a community property state, both spouses are probably going to receive 50 percent of all assets accumulated during the marriage. The news has also left many wondering how this division of property would work if the couple lived in Illinois. The question is a good one, as Illinois operates under very different rules.
Community Property States
Currently, only nine states in the country are community property states: Louisiana, Arizona, California, Texas, Idaho, Nevada, New Mexico, Wisconsin, and of course, Washington. In these states, any income, property, or other assets acquired during a marriage are considered community property. Upon divorce, each spouse will then receive 50 percent of those assets, in most cases. This means that even without a prenuptial agreement, MacKenzie and Jeff Bezos will likely each receive half of the income earned from Amazon during their marriage, in addition to half of the many real estate properties they own and any other financial assets....
The divorce process involves multiple steps, even if the spouses are able to reach an agreement and execute a settlement on their own without the need for court intervention. However, if litigation ensues, and a trial is required to resolve any outstanding issues, the process can be especially involved. Typically, if a judge is asked to decide any legal issues between a divorcing couple, multiple requests for information and motions related to the claims each party is making will be filed, ultimately culminating in a trial, where the judge will hear arguments, accept evidence and render a judgment.
Even in uncontested divorces, attending multiple hearings is not uncommon before the final divorce judgment is issued, and this can be a nerve-racking experience, regardless of the level of mutual agreement. By contrast, if a couple’s divorce gets to the trial stage, this event can trigger a lot of stress and worry for each spouse. Emotions run high during divorce, and the thought of appearing before a judge to find out what the terms of the settlement will be is understandably overwhelming for both parties. However, as in all things, information is power, and having a basic understanding about how hearings and trials work during the divorce process can go a long way toward defusing some of the anxiety that these appearances provoke.
When Are Court Appearances Necessary?
How often and how extensive court appearances will be depends on the outstanding issues that must be resolved in a divorce case. Some appearances can be handled by a spouse’s attorney without his or her involvement, but other issues do require the attendance of both spouses before the court will enter an order. For example, if there are requests for temporary child support, alimony, and/or child custody arrangements while the case is pending, each spouse will be expected to appear in person....
Struggling to make ends meet puts a strain on the best of relationships, and if it lasts for a considerable period of time and/or is extreme, overcoming this challenge may prove more than a couple can bear. Marital assets and debts must be divided in divorce, and when finances start to break down, the ramifications can reach all the way to the possible loss of a home through foreclosure. Navigating the divorce process is hard enough in straightforward circumstances, but it can become quite complicated when an active foreclosure is being sought, because the mortgage lender has a legitimate interest in how this asset is divided. This situation may be further complicated if one spouse wants to attempt to save the home and assume sole possessory rights and ownership.
In an unusual case, an Illinois appeals court upheld a default judgment that terminated the interest of a divorcing couple’s mortgage lender in the marital home, which was in the middle of a foreclosure, because it failed to respond to a complaint by the husband challenging its validity. While uncommon, this case highlights how intertwined a divorce and a foreclosure can be.
Who Is Responsible for the Debt?
Financing the purchase of a home involves the legal assumption of the obligation to repay a promissory note, the contract that outlines how long and how much the buyer must pay to satisfy the loan. In addition, a lien is placed on the property, which gives the lender the right to repossess the property in the event of default. Most couples jointly sign these documents, making both spouses liable to meet the terms or face foreclosure....
Deciding to take the final step to end a relationship is never an easy decision, but divorce can become much more complex when one spouse has issues with a psychological condition that compromises his or her capacity. Mental illnesses and cognitive conditions are challenging to recognize and adequately address, and staying in a marriage with a person experiencing these issues may not be advisable if issues of safety and emotional stability are an issue for either spouse.
Divorce requires making a number of significant and binding decisions, and the presence of mental illness or cognitive dysfunction can greatly alter how these decisions are handled, as well as how the impaired spouse may respond to divorce as a whole. The overarching influence of mental illness in some divorces is rarely discussed, primarily due to the stigma associated with mental illness in this country generally. However, mental health issues can take many forms, from alcohol abuse to bipolar disorder, and these issues can affect a relationship in a wide variety of ways. Mental illness will touch more couples than is generally recognized, and it can affect divorce proceedings in the following ways:
Grounds for Divorce
A number of states include a provision in the law that authorizes a divorce if mental incapacity of a spouse is established; however, Illinois is not one of them. Until 2016, Illinois retained a divorce system that was primarily fault-based, and one possible grounds for divorce was drug and alcohol addiction, conditions that are known to alter the abuser’s mental state at least temporarily, and sometimes permanently. Qualified no-fault divorce did exist, but it required lengthy separation and other requirements that could be burdensome to satisfy....
Responding to the changes brought on by divorce is no easy matter, as they encompass nearly every aspect of a person’s life. One’s finances are heavily impacted by this process, since the resources available to each spouse will be reduced after one household is split into two. The payment of child support and alimony are further expenses that can strain a person’s budget.
Taxes is one area that is less discussed but is still vitally important to achieving a fair property settlement and understanding how one’s financial picture will look for at least the next few years. Spouses should understand the tax consequences of divorce, including how taxes apply to the division of assets and debts, as well as their post-divorce income tax liability. This issue is of particular importance, as the window to take advantage of the current tax law that allows the payor to deduct alimony payments is closing at the end of 2018.
Because some tax repercussions do not appear immediately, the real economic implications of divorce agreements and associated court orders may not be felt until the divorce has been completed. Understanding these issues can help divorcing spouses avoid being blindsided by potential tax liabilities in the future....