Cash-lean accounting and plenty of legal safeguards ensure that even multiple broken marriages to the same woman won’t do more than dent the billionaire’s net worth.
Elon Musk’s personal affairs are barely a factor in his science fiction ambition. He has no obvious human vices, doesn’t even drink and spends much of his brainpower pondering ways to manage apocalyptic risk: global warming, robot uprising, asteroid impact.
His only frailty so far has been loving women who leave him, collecting a little alimony in the process. Sometimes he marries them twice, in which case they’re theoretically eligible to cash a severance check both times.
But even with his third divorce in eight years hitting the books now, he’s probably only exposed 0.1% of his $13 billion fortune to Cupid’s poisoned arrow.
With Amber Heard -- best known to Trust Advisor readers as Johnny Depp’s charitable-donation-hunting ex-wife -- already on his horizon, the Musk lawyers may get the ultimate professional workout soon.
And remember, he lives in California, where theoretically the money he makes while he’s married splits 50/50 when each relationship hits the rocks.
Tight risk discipline
Musk will probably pay around $16 million to now-ex-wife Talulah Riley to match the settlement he originally approved two years ago before they reconciled.
After their first marriage ended, she became eligible for a total of $4.2 million in alimony, plus her very own Tesla car and some jewelry.
Since she wasn’t single for much more than a year before they remarried, it’s unclear whether the payments continued beyond the first booster installment.
Even the first Mrs. Musk, who stayed with him for eight whirlwind years and gave him six sons in the process, is probably only going to end up with around $18 million and the obligatory electric car when her settlement ticks out.
These are big numbers for little people, but they’re barely a rounding error on his net worth. It’s likely that every time the Fed moves, it causes Musk more financial pain than either of his divorces.
The secret is that his apparent immunity to marital judgment, like his industrial empire, revolves around multiple self-reinforcing risk management strategies.
He started Tesla as a way to ensure that fossil fuels didn’t wreck the planet for billionaires like him during his lifetime. In theory, of course, it could also make him a whole lot richer as well.
Buying SolarCity gives him a way to further reduce the global carbon footprint while opening up a new commercial outlet for the lithium power packs that Tesla pumps out.
And the rocket company SpaceX lengthens the odds that even if this planet becomes unlivable, Musk will always have Mars.
Back here on earth, interlocking asset protection has kept even the most fractious divorce settlement from risking more than a few million dollars at a time.
Right now a simple calculation indicates that his public stock is worth around $7.4 billion today and his controlling interest in SpaceX might be valued at another $7-$9 billion on paper.
Granted his balance sheet isn’t exactly spotless because he’s also borrowed hundreds of millions to keep pouring into all of his companies as well as pay his personal overhead. But assets minus liabilities may still be in the $13 billion range.
Canoodle but never commingle
And it’s all his because his venture capitalist investors long ago made sure to establish that his shares in each enterprise remained separate property and not something that rolled into each marriage.
When his first wife had to sign a postnuptial agreement relinquishing all right to the company that would become Paypal, it was because the investors insisted.
Although her lawyers ended up fighting the relatively unusual after-the-ceremony arrangement, at the end of the day she still gave up all claim to the business he’d largely built by the time she came along.
After that, there was no question of who cashed the check when eBay bought the company. All that money went into a revocable trust with one name on it: Elon. And since that trust was funded with separate property, not even California divorce courts will open it up now.
The trust turned around and created SpaceX and Tesla, buying a 22% stake in SolarCity along the way.
Over the intervening decade, wives have come, gone and come back around, but the trust remains the constant in the House of Musk.
We don’t know if he set the trust up in a state that would protect the assets from creditors or other liens, but it’s clear that between the marital agreements and the clear separation of property, the divorce court won’t touch it.
As clean-cut as Musk is, that probably covers his only real financial risk right there.
All stock, no cash
The controlling shares are really the only wealth Musk cares enough about to lock down ownership in the trust.
He doesn’t have a lot of free cash lying around. Unlike a lot of self-made billionaires, there’s no vast rainy day fund of Treasury paper generating enough interest to keep an entire town sheltered and fed.
Musk doesn’t rate a salary from any of his companies. There’s no real pool of executive income here for a divorcing spouse to claim she helped build.
In theory he’ll earn $1.6 billion from Tesla if he achieves his expansion goals in the next six years, but right now that award is contingent on performance, so it’s worth nothing.
Either way, it will be in stock and not cash -- and Musk is famous for buying back his own stock instead of selling it to fund the billionaire lifestyle.
Buying that stock and paying the miscellaneous bills have left him at least $300 million in debt, which is actually a staggering number even in the face of his asset base.
Someone could argue that may represent marital debt since he signed the promissory notes while married, but there’s no real need to go there. All of his marriages so far has been extremely asymmetrical when it comes to the positive side of the family balance sheet, so it’s probably best to keep the liabilities on his book as well.
He called the shots. His separate collateral backs the loans. It’s his burden.
We don’t know how much cash he keeps on hand, which is probably why his divorce settlements revolve around installment payments.
Maybe he’ll cash in a little stock to cover his next batch of alimony checks. Maybe he’ll decide to pay himself a real CEO salary solely in order to keep the ex-wives happy.
After all, he’s in control of around $30 billion in market capital among all of his companies. Freeing up an extra $1 million in cash per year for the CEO to bounce back to the ex-wives wouldn’t impact anyone’s lifestyle that much, but he’d be able to concentrate a little better on building the empire.
While he seems to have been deeply in love with both wives at various points in his life, the empire is definitely what matters to him now. As long as he can chart his companies’ destiny, he’ll sink or swim with them.
And maybe he’ll marry again. As I mentioned, Amber Heard has been sighted in his orbit. If Elon Musk is on her radar, it explains why she wanted ex-husband Johnny Depp’s charitable deductions more than his cash.
Simply living with Musk is probably more luxurious than most starlets can even imagine. He reportedly spends $2-$3 million a year, which is only what the interest on $80 million in Treasury bonds pays.
Heard’s entire divorce settlement boils down to two years of Musk’s household budget.
As long as he can maintain that lifestyle another 5-6 years, his corporate vision may actually evolve to a place where he can cash in a big multiple of that amount of wealth.
And in the meantime, he’ll protect his downside. Life will go on.
