On May 3, Microsoft co-founder Bill Gates, 65, and his wife Melinda French Gates, 56, announced their divorce on Twitter after almost 30 years of marriage. That same day, Ms. Gates filed a petition for divorce, which Mr. Gates joined. The petition states that the marriage is “irretrievably broken” and that they had separated.
As of May 5, Bloomberg Billionaires Index ranked Bill Gates the fourth richest person on the planet worth $144 billion.
It appears that the couple carefully planned their separation, ending the marriage after their youngest child turned 18 and entering their divorce proceedings in Washington Superior Court in Seattle, King County, after already having signed a separation contract, which is like a settlement agreement.
Washington statute describes a “separation contract” as a written agreement providing for maintenance, property and debt division, and children’s issues in divorce and similar proceedings. The terms (except parenting plans) are binding on the judge in the divorce unless the agreement was unfair when signed, in which case the judge would decide the issues instead.
The Gates’ petition asks the court to dissolve the marriage and divide the property and debt as the parties have agreed.
Since their children are adults, almost all legal matters will involve property, investments and money. Ms. Gates did not request spousal support. According to CNBC, the couple’s assets include:
- Real estate worth over $166 million, including homes and other properties in Washington, Florida and California as well as a private Caribbean island; The New York Times reports they are the “largest owners of farmland in America”
- Sports cars worth about $650,000
- Art valued at about $130 million
- Cascade Investment, a $30 billion holding company funded with Microsoft assets that owns interests in hotels, car dealerships, the Canadian National Railway and more
- Microsoft shares of more than $26.1 billion
- Money totaling approximately $19 billion
By court order, during the proceeding neither party can dispose of or encumber property or modify insurance policies unless they agree in writing or pursuant to court order. Exceptions include property disposed of “in the usual course of business, or for the necessities of life.” Each is liable for debts they incur going forward unless they agree otherwise.
The couple has donated billions to their philanthropic organization the Bill and Melinda Gates Foundation with which they will reportedly both still be involved. The foundation supports causes worldwide involving education, nutrition, health, poverty and infectious disease, including COVID-19.
According to the New York Times, an irrevocable charitable trust holds the foundation’s endowment so no foundation assets will be part of the marital estate to be divided (called community property in Washington).
Lessons from the Gates
Most couples of significant financial means face certain unique issues, some of which the Gates appear to have tackled head-on. The vast wealth of a couple like this is extremely difficult to inventory and it is a challenge to affix proper value to each asset. They appear to have worked cooperatively – likely with their lawyers – to evaluate their holdings, have them assessed or appraised and negotiate how they will divide them.
And it’s not as easy as dividing up the pie. Considerations of taxation as well as of estate planning and gifting must factor into each decision.
Unique assets like fine art and antique cars can be particularly hard to evaluate, in part because there may be few experts who understand the relevant markets. Complex investments, offshore assets, foreign real estate and international business interests are additional categories needing careful analysis.
Negotiating a settlement – while it could always fall through – will likely prevent a trial and keep their affairs personal and largely out of the public eye.