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How a Texas Court Might Have Handled the Hamm Divorce

This past November, an Oklahoma County Judge ordered billionaire oilman Harold Hamm to pay approximately $1 billion to Sue Ann Hamm, his wife of 26 years.  Harold Hamm, who is the founder and CEO of Continental Resources, was specifically ordered to pay Sue Ann Hamm a total of $995.5 million, comprised of a lump sum payment of $320 million to be paid775063_12888689 by the end of 2014, and the remainder to be paid via installments of at least $7 million per month.

If the Hamm divorce occurred in Texas, then the result might have been different.  For one, Texas is a community property state; whereas, Oklahoma is an equitable distribution state.  In Texas, all property existing at the time of divorce is presumed to be community property.  To rebut the “community-property presumption,” a spouse must present clear and convincing evidence of the property’s separate character.  Income from community property during marriage is generally considered community property, and under Texas law, once the character of property is established, that character will not change because of appreciation in the property’s value or because of mutations in the property’s form (for example, being exchanged or sold for other property).  Texas Family Code, Chapter 3.

In Oklahoma, however, the money a spouse earns while married is considered “marital property” (property that can be divided upon divorce) if it is made through skill.  On the other hand, if the money is attributable to “changing economic conditions, or circumstances beyond the parties’ control,” then that money is not considered marital property.  If all of Mr. Hamm’s fortune was acquired by means other than by gift, devise or descent during the marriage, then a Texas trial court could have found that the assets comprising Mr. Hamm’s approximate $14 billion net worth were community property and made a ruling in conformity with such a finding (which likely would have resulted in a substantially greater sum than $1 billion being awarded to Sue Ann Hamm).

Pursuant to Sec. 7.002 of the Texas Family Code, the community estate must be divided in a manner that is “just and right,” taking into account the rights of each spouse and any children of the marriage.”  If the spouses do not reach an agreement on the terms of the division of the community estate, then the division of the estate is an issue that can only be tried before a Court.  A jury does not determine the just and right division of the community estate; however, the issues of characterization of the property and value of the property can be tried before a jury with binding factual findings.

The division of the marital estate in the Hamm case was determined by the trial court, which would have been the case in Texas had the Hamm divorce occurred there.  Generally in Texas, the larger the community estate of the parties, the more equal the division is by the Court.  In Oklahoma, however, that does not appear to be the case, since Sue Ann Hamm was apparently awarded with only 7 percent of the total value of the marital estate.