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I saw an article the other day about how Jeff Bezos, the majority owner of Amazon, got divorced and had to pay his wife billions. If he has much of his fortune tied up in equity, how does he liquidate those assets without tanking the price of the shares and getting into trouble?

I'm assuming that major shareholders of publicly listed companies have a fiduciary duty not to tank shares like that.

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    the partners in these divorces do not "pay" each other anything. You imply that Bezos owned all that stuff singularly and personally and then had to pay a lot of money to his wife, causing her to start owning things she hadn't owned before. The law (and the reality) is the opposite. They both owned all of it. When they divorced, some of it had to be moved into her name or transferred into her accounts or whatever. That is not paying her. And further, transferring shares into someone's name is not selling them and doesn't affect their price. Feb 27 at 12:24
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    Okay we can split hairs about selling versus giving but even just the slightest of charitable reading of this question should make it clear what I meant.
    – Neil Meyer
    Feb 27 at 12:47
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    You still clearly believe those shares were his and he had to pay her or give them to her. When you understand that they were always hers too, it will all make more sense to you. Feb 27 at 12:49
  • I guess a follow-up question would be if Mackenzie Scott wanted to liquidate the stock she got in her divorce settlement how would she do that without tanking the share price of the Amazon company? I'm assuming that 4% of shares in a company suddenly coming to market overnight has the chance of flooding the market with shares.
    – Neil Meyer
    Feb 27 at 12:55
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    @NeilMeyer please ask a new question for that, given your old question had an answer already. Feb 27 at 13:52

3 Answers 3

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In a divorce, typically the assets of the couple are split between the ex-partners. There is no need for any large-scale selling here. For example, when Jeff Bezos and MacKenzie Scott divorced, Scott just got a certain amount of the Amazon shares. It seems that Bezos currently owns 9% of the company and Scott 4%, but I don't know how much of this is due to an uneven split, Bezos getting more shares later or Scott selling off shares.

News reporting often doesn't really distinguish between money and shares, so you may have read "X gets 1 billion" even if it actually is the case that "X gets shares currently valued at 1 billion". Similarly, when considering reports of net worth of people, one needs to keep in mind that it is not easy to convert a large amount of shares in one company into the cash they are currently valued at.

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  • Yep. Divide the shares. If one of the parties then decides to sell off -- well, they're going to try to get the most money they can for the shares, which means they're generally not going to risk driving the share price down. And they may not even be able to, if there's enough demand for them at the current price (plus market makers) to soak up that dump.
    – keshlam
    Feb 27 at 9:07
  • @keshlam I suppose that even if someone would sell in this scale, they wouldn't do it as a market order soaking up half of the order book, but with one or many limit orders at slightly above the current price.
    – glglgl
    Feb 27 at 11:11
  • I'm curious if stock is given in a divorce settlement would that incur donation tax?
    – Neil Meyer
    Feb 27 at 12:48
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    It isn't "given". It is value that already belonged to thar individual. Exactly as, in a normal divorce settlement, the negotiation may leave one with the house and the other with cash, as long as it balances out to whatever is determined to be fair assignment of value contained in the shared property.
    – keshlam
    Feb 27 at 13:55
  • And correction: divide the value. Which in this case may mean dividing the shares in this company, or may not. (I doubt all of Bezos' wealth is in Amazon shares; if it is he's taking a gawdawful huge risk.) See my answer for more on that
    – keshlam
    Feb 27 at 21:47
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Answer to the new (edited) question is that block sales are usually handled by investment banks. These large trades are not executed on stock exchanges but rather they look for potential buyers and agree on a price for a private transaction. There is usually a discount with respect to stock exchange quotes because large volume offers will reduce stock price (temporarily).

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    That would be one method, but slow release of shares over time on public exchanges would be another common method. Feb 27 at 13:34
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    I've rolled back to the original version of the question so this answer is no longer valid, sorry - hopefully there'll be a new question you can attach this answer to instead. Feb 27 at 13:52
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High-value divorce is exactly like any other divorce. The parties negotiate (or litigate) how much of the household's value should be considered the property of each of them based on the value they contributed to the relationship -- said value not necessarily being financial -- and obligations each of them is retaining (housing/raising the kids, for example). They then divide the property in a way that is agreed to result in each getting an acceptable share. This can be influenced by pre-nuptual agreements, or by community property laws, or by other things, but it's all about setting the balance as percentages of that total.

In a normal divorce, one party might get the car and while the other gets the minivan and the bicycles, or any other combination of property that is the proper counterweight so that, in the end, the balance comes out to what was determined to be fair. If Ginger is assigned the house, Fred might get an appropriate sized chunk of their financial wealth to balance that.

Note that even if the balance point is 50/50, this doesn't mean that bank accounts or investments (or children or other individual objects) must be split down the middle. It just means that each leaves with what is considered half the total value/responsibility mix. And shares of stock can be traded off against shares of other stock, or cash, or anything else.

(Or as Groucho Marx suggested: "You take Junior, he takes the house, Junior burns down the house, you take the insurance, and I take you!")

And as commented elsewhere: Because this is dividing the shared wealth/commitments of the household, it is not a sale or a gift or anything else. It's just transferring stuff from one brokerage account to another. They each already owned that much of the shared value, this just puts it in a form each can walk away with.

Going beyond that level of detail would be a topic for the Law stack, not Personal Finance.

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