$1-billion divorce settlement offers lessons to Californians
The recent Harold and Sue Ann Hamm divorce settlement, worth nearly $1 billion, is about a lot more than money. Californians can take away one hard lesson from the saga of this high-profile couple, plan ahead. A newly married couple may feel that only bliss awaits them in marriage and that financial matters will sort themselves out, but a prenuptial agreement is a simple way to acknowledge a stark reality, 50 percent of marriages now fail.
When an Oklahoma court awarded ex-wife Sue Hamm $975 million from Harold Hamm’s oil fortune, now estimated at more than $9 billion, most observers were shocked. When Sue Hamm appealed the ruling on the grounds that Hamm was worth far more and owed her because of her contributions as attorney and executive at his oil-drilling and exploration company, these same observers were incredulous.
However, the divorce case offers a succinct lesson about the difference between marital property and separate property. A prenuptial agreement might have saved Harold Hamm a considerable amount had it spelled out exactly what was marital property and what was separate property. Basically, properties obtained during marriage are marital property. Separate property can become jointly owned if it is treated as a gift to the marital estate or increases in value through the efforts of the other spouse. In this case, it is possible much of the conflict over property division and which properties were marital or separate could have been avoided by a prenup.
A prenuptial agreement can override state laws, particularly those that apply to the division of assets. For business owners, a prenup may allow them to keep personal property separate from marital property. The agreement can also clarify each spouse’s financial rights and interests.
Source: Investment News, “Lessons from the $1B divorce case: How to split business assets“, Darla Mercado, Jan. 13, 2015