High asset divorce: Community property and equitable division
Nov 28 2014 - Posted by On Behalf of the Lincoln Law Firm, PPLC, in Divorce, Tagged in Divorce, high asset divorce, Property Division
Both local and national news headlines have recently highlighted the story of billionaire Harold Hamm, the chief executive of Continental Resources who recently went through a much-publicized divorce trial. Like many of Houston’s financially well-off residents, Hamm made his fortune in the energy sector. At issue in the divorce was whether Hamm’s ex-wife played a crucial role in helping him build that fortune and, if so, to how much of it she was entitled after the divorce.
The former couple’s high asset divorce ultimately concluded with what many would consider a sizable settlement for Hamm’s ex. An Oklahoma judge awarded her over $995 million; that amount is composed of both cash and other assets. While the amount may seem staggering to many, some lawyers interviewed by the media reported surprise at the relatively modest share his wife received. Together, the former spouses had a net worth estimated at around $18 billion. However, according to the judge on their case, the massive accumulation of wealth during their decades-long marriage was primarily due to market forces, not to the efforts of the spouses.
For his part, Hamm said he found the settlement to be a fair one. The attorney for his former wife, however, indicated that he will likely appeal the judge’s decision. Of the pair’s estimated net worth, the wife received less than 6 percent. In many high asset divorces, one of the main divorce legal issues is the percentage of the marital estate that either spouse receives following the split.
The Hamms’ divorce was handled under the laws of Oklahoma, which uses a system called equitable division when dividing property at the end of a marriage. Under this system, courts decide how to divide the property earned during the marriage according to state guidelines on fairness. By contrast, Texas is a community property state, with very different rules. Under community property laws, each spouse typically has a claim to 50 percent of the value of all assets acquired during the marriage. In theory, this makes property division in community property states simpler than it is in other states.
In practice, property division is rarely simple, even in community property states. An experienced Houston family lawyer can explain the implications of this type of system and how it relates to each client’s unique circumstances.
Source: The Washington Post, “When a $1 billion divorce award isn’t enough,” Michelle Singletary, Nov. 20, 2014
