Oklahoma divorce ruling finds company stock is separate property

March 19, 2014 (Press-News.org) Oklahoma divorce ruling finds company stock is separate property

Article provided by The Pilkington Law Firm, PLLC
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The division of business assets in a divorce can have a dramatic effect on the future course and survival of a company. Control of an Oklahoma City-based oil company called Continental Resources Inc. has been in question since the divorce proceedings of Harold and Sue Ann Hamm became public.

In a recent ruling, an Oklahoma judge held that 122 million shares of Continental are pre-marital or separate property, because Howard Hamm owned them before the marriage. This means that the shares will not be divided as part of the marital property division. Howard Hamm will retain his controlling stake in the company.

The divorce petition was filed May 18, 2012 under seal with "Jane Doe" as the plaintiff, according to Oklahoma County court records.

The Hamms married in 1988 and value of the stock has grown exponentially over the years. The judge has yet to determine the appreciation in the value of stock over the course of the marriage and how that sum will be divided.
Characteristics of separate and joint property

Property accumulated during a marriage by joint efforts is generally marital. Oklahoma law requires that property jointly-acquired is fairly and equitably divided in a divorce proceeding.

On the other hand, property owned by one spouse prior to marriage generally remains separate or pre-marital. Several other types of separate property include:
-Inherited property
-Gifts to one spouse
-Property acquired after a separation.

An example from the last category would be a rental property purchased following a separation that is titled individually.

If the asset is commingled, the status can change to marital property. For instance, if a substantial gift made to one spouse is placed in a joint bank account and spent on household expenses it likely will become marital property.
What happens with the appreciation of separate property?

Generally, the "increased or enhanced value" remains separate property and would not be subject to division in an Oklahoma divorce. An exception exists when joint efforts, skills or funds underlie the increase in value. The spouse who seeks a division of the increased value must prove that the appreciation was a direct result of substantial contributions.

In the Hamm divorce, both spouses worked for the company. Simply working for a company is not enough to acquire an interest in the enhanced value. It will be necessary for Sue Ann Hamm to show that her efforts and skills substantially contributed to increase in the value of the company. Testimony from key employees and company documents may show her contributions over the years.

The distinction between separate and joint property is not always clear. These characterizations can greatly impact a property award. Seeking the assistance of an experienced family law attorney is one way to ensure you receive a fair property settlement.