The Koblin Family Law Center

Ruling puts 'tricky' spin on stocks in divorce asset division

Readers of this blog likely are aware that California is a community property state. What that means is that property acquired during the course of a marriage is designated as community property and is subject to equitable division in divorce.

Every identified asset may not get split down the middle. But every asset needs to be valued. And both sides need to agree on how the numbers add up. If they don't, they may have to leave the decision in the hands of the judge.

There is a high-asset divorce case out of Oklahoma that presents particularly interesting challenges in regard to the issue of stock. 

It involves billionaire oil industry magnate Harold Hamm. He currently is said to hold 125 million shares of stock in Continental Resources, Inc., which gives him controlling interest in the company. But as a result of a judge's recent decision some wonder if Hamm's position as CEO could be jeopardized.

What makes the case interesting is that the judge apparently has accepted Hamm's claim that the stock should be considered a premarital asset. But the judge also ruled that however much the stock has appreciated in the course of the Hamm's 26-year marriage may be subject to division. According to reports, the value of his stake in the company has risen by about $13 billion just since 2007.

Analysts say the apparent split decision presents a unique challenge about how to gauge how much of the stock's value should be subject to division. They speculate that it may come down to trying to measure how much of the appreciated value has been due to market conditions, and how much might be attributed directly to Hamm's business actions.

Observers say value tabbed to the former conditions would not be divisible, while that linked to the latter would be.

The Hamms initially filed for divorce in 2012. The case is slated to go to trial in July. Some estimate that if Hamm has to liquidate or hand over $4 billion worth of stock, which seems possible, he could lose control of his company.

This may seem to be an extreme case, but it serves to show property division issues can get complicated in divorce. An attorney's help should always be enlisted.

Source: Tulsa World, "Divorce could affect Oklahoma billionaire Harold Hamm's controlling stake in oil company," March 20, 2014

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