In Colorado, property obtained during the marriage by either spouse is considered marital property, and is divided equitably between the parties. Property either spouse brought to the marriage is separate property. Separate property is not divided in a divorce; it remains the separate property of its owner. Just how important this distinction can be was illustrated recently in the divorce case of oil billionaire Howard Hamm.
This blog first discussed Hamm’s divorce about a year ago. At that time there appeared to be a risk that Hamm could lose control of the company he founded, Continental Resources, in the property division. Investors were concerned about the company’s future if Hamm had to divide his shares in the company with his soon-to-be ex-wife. That could have left Hamm with less than a majority share of the stock and loss of the corresponding voting rights.
Recently, however, an Oklahoma judge ruled in Hamm’s favor as to that issue on a summary judgment motion. The judge ruled that because Hamm owned the approximately 122 million shares at issue before the marriage, the shares were his separate property, and did not have to be split with his wife.
In Colorado, although separate property is not divided, any appreciation in its value that took place during the marriage is considered marital property. To the extent shares of stock increased in value, that increase would be subject to equitable division. That might require a majority shareholder like Hamm to make a big cash payment to their spouse, or make other concessions in the property settlement. But as long as the shares themselves remain separate, non-marital property, the original owner should be able to retain control of the business.
Source: Forbes, “Judge: Billionaire Hamm To Retain Control Of Continental Resources In Divorce Settlement,” Christopher Helman, March 4, 2014