Sharing the Wealth

When Jeff Bezos and his wife MacKenzie announced that they were getting divorced in January, media around the world focused on his vast wealth--reported to be at around $137 billion--and, not surprising, the size of the couple's divorce settlement. The divorce was quickly settled--and is likely to be finalized in July--and MacKenzie has now announced a move that's become popular amongst extremely high net worth individuals: giving a large percentage of her settlement to charity.

Ms. Bezos's earmarked donation--through the organization The Giving Pledge, which has also been supported by people like Warren Buffett and Richard Branson--does indeed make her appear to be generous and altruistic: the same message sent out by actress Amber Heard, for example, when she divorced Johnny Depp last year and gave the money from her divorce settlement to charity.

It all sounds well-intentioned, but it's worth considering a few things. Firstly, Ms. Bezos, even after her donation, will be extremely wealthy: she will still have, according to reported figures, more than $18 billion, after the donation.  Needless to say, that makes the donation, while admittedly vast, unimpactful to her daily life. Also, there is tax deductibility to consider as well...a major benefit of making such a large donation.

It's worth mentioning, as well, that many, many wealthy individuals create foundations that require regular disgorgement of funds to charity.

For my high net worth clients, sometimes this type of donation does make sense, and is typically fueled by the best intentions.  For people in the spotlight, there is the added plus of the appearance of benevolence, which--at the risk of sounding cynical--is usually part of its appeal.

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