As a divorce attorney practicing primarily in the Phoenix East Valley, I think I can safely predict I will never have a client who will need to divide $146 billion in wealth after 27 years of marriage. As unique as the Bill and Melinda Gates’ circumstances are relating to their divorce, however, there are things to learn and observe as the divorce unfolds.
Here are some things to consider:
Gray Divorce is on the Rise. It is becoming more and more common for couples over 50 to divorce. There was a time that couples stuck together after “rounding the bend,” of having raised their children to adulthood, but the demographics are shifting. According to Pew research, the divorce rates have doubled for Americans over 50 since 1999. Both Bill and Melinda Gates are over the age of 50 – what is commonly called a “gray divorce.” While Bill and Melinda will both be financially just fine when it is all over – that isn’t always the case for older couples divorcing. Financial planning is imperative for both parties. Divorce often leaves one party or both financially strained – particularly after a long marriage where retirement and other assets have been co-mingled. The consequences could be severe. The poverty level for people who divorced later in life was around 19%, according to a 2016 study from Bowling Green State University, compared to 1-3% for married seniors and 13% for widowed seniors. When possible during a “gray divorce,” dovetailing planning with a financial advisor is very important. It is also important to have an effective advocate. I am fortunate to be in a law firm that offers estate planning and asset protection along with family law. This allows me to not only represent a client well during the divorce, but also make strategic decisions and plan for their future as well.
Settle or Go to Court? And while the Gates’ have announced jointly their decision – indicating that things likely will both be very cooperative and therefore very private, older couples who have seen vast gains in net worth over the years often do end up in divorce court rather than at the negotiating table, because, as referenced above, there is so much at stake.
Another key consideration is that couples who have been married a long period of time often have a vast network of mutual friends. As for the Gates’ we’ll almost for sure never hear the full details of the divorce as they’ll keep things private and settle rather than go through to trial. I always like to remind my clients that divorces are public records, and that your network of mutual friends can get all the details they want about the proceedings. However, through settlement and/or getting your case sealed, you can keep a lot of the divorce details away from prying eyes. If divorce looks like it will be your future and you value your privacy, you will want to talk with a lawyer about mediation, settlement, and/or court procedures to keep your case less public.
A Prenuptial Agreement is Often a Good Idea Even if you don’t anticipate eventually owning a notebook from Leonardo Da Vinci, acquired for $30.8 million in a 1994 auction, or four rare first-edition copies of F. Scott Fitzgerald’s “The Great Gatsby,” or a $650,000 sports car collection; a prenuptial agreement is often a very good idea. As wedding season nears, I always see an uptick in requests for pre-nups, and that is a good thing. They are not just for rich people and billionaires. Surprisingly, Bill and Melinda Gates did not have such an agreement, so there are no set boundaries to divide his from hers in this case. A prenuptial agreement is often seen as a plan for divorce, but in reality, it is commonly an estate planning tool. For those on their second marriage, and/or those with children from prior relationships, a prenuptial agreement can be critical to keeping a portion of your estate separate to ensure you balance your financial goals of supporting your spouse and your other child or children. If nothing else, even if divorce follows a prenuptial agreement, the arrangements made in a prenuptial agreement often relieve the need to litigate certain issues, which I have personally seen save thousands or even tens of thousands of dollars.
Jurisdiction and Quality of Representation In a divorce case, it is always important to remember that state law governs. While the Gates’ have announced jointly their intentions to be amicable and private, the couple do live in Washington, which is a community property state. That means a judge could potentially divide their marital assets equally, which would mean Melinda could walk away with half of Bill’s $150-billion fortune.
Both Bill and Melinda have retained among the finest law firms in the country. While not everyone can afford or needs a New York or San Francisco law firm, the Gates’ understand that it is important to have a very good advocate in your corner during a traumatic and trying time in your life. Simply put, you don’t know what you don’t know. That’s where a good family law attorney can be an invaluable advocate. Most people going through a divorce are doing so for the first time. So it’s a new experience full of emotion, and financially speaking, you only get one shot at getting through the divorce. So it is critical to obtain good representation to get it right the first (and only) time.
Whether you created Windows, or washed them, you can learn a lot from Bill and Melinda Gates’ divorce. If you need to know more about an Arizona divorce specific to you or someone you care about, you can learn even more by talking with an experienced Phoenix family law attorney.