Equitable Distribution – Appreciation of Non-Marital Assets

Frack me! I Should Have Gotten a Prenup…

equitable distributionUndoubtedly those words have been muttered behind many a closed door throughout Harold Hamm’s divorce proceedings; especially when it comes to the issue of equitable distribution. More Clampett than Rockefeller, Mr. Hamm is truly a product of the American dream. The son of Oklahoma sharecroppers, Hamm grew up picking cotton alongside his twelve siblings until his interest in oil was piqued by his first job at the local fill station. Fast forward a few decades and the second most desirable bachelor dubbed HH, pending his divorce and if you’re into the geriatric sponsor thing, is sitting at the helm of Continental Resources, Inc.; arguably the most successful domestic oil drilling company of today. And since Hamm’s marriage hit the skids, his blushing bride, Sue Ann, is arguing that her man’s $17.2 billion stake in the company is up for grabs as a key piece in divvying up their marital estate.  I mean, really, Coppola couldn’t write a screenplay as juicy as this story line.

Equitable Distribution Divorce Basics

equitable distribution floridaLike Florida, the magnate’s home state of Oklahoma subscribes to equitable distribution in the context of divorce. In mapping out a trip to Splitsville, the court analyzes the parties assets and liabilities and characterizes each one as marital or non-marital. Simple enough, right? Yeah, maybe if today is opposite day, zing! Sorry, can’t help it, I have loved that phrase since 4th grade and just can’t seem to quit it. Also on the list: syke (obviously with four e’s after for effect) and duh… but I digress. Anyway, a wrench is usually thrown into this seemingly straightforward formula when the value of a non-marital asset is enhanced during a marriage.

In this instance, a court is then charged with the task of deciding whether marital labor (or funds) expended on the non-marital asset directly resulted in its appreciation. It is only when appreciation occurs as a result of the marital effort (or funds) that the enhancement in value of non-marital property may be considered a martial asset. The burden of proving marital appreciation lies with the party asserting that a portion of the non-marital asset is, in fact, marital due to the active appreciation. However, once it is established that marital labor was indeed expended, the burden falls to the party claiming that the increase is non-marital to establish whether any part of the increase was the result of passive market conditions and, thus, exempt from equitable distribution.

Define Equitable…

equitable distribution divorceAnd so, the one-time life partners are now pitted against each other as their divorce drama plays out for the world to see. Obviously, the Mrs. is alleging that Continental’s success is a direct result of her ex’s entrepreneurial genius while Hubby is shouting from the rooftops that he is no Miss Cleo and in no way could have predicted the Middle East turmoil that caused oil prices to increase (among other factors in which he had no part such as the invention of fracking). Meanwhile, Continental’s shareholders are in a state of limbo as their CEO’s control of the company is in question. Hmm, too bad the board didn’t read my last blog post.

And yet, perhaps the most interesting part of the story dates back to 1987, when Harold Hamm’s first wife filed for divorce. Her reasoning was based on an allegation of adultery; specifically an office liaison with one of Continental’s attorneys, a decade her spouse’s junior. One short year later, the magnate and his former counsel found themselves in Vegas legitimizing their relationship with an exchange of vows. Who was this surreptitious seductress? You guessed it, Sue Ann Hamm, his equitable distribution adversary. Looks like old Harry’s got 100 problems and karma might just be one.



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