Big & Rich Texas Divorces: The 5 Biggest Hurdles That Complicate Complex Property Settlements in the Lone Star State

Divorce Attorney Aubrey Connatser Explains How the $1 Billion Hamm Divorce Settlement Might Play Out in Texas

The divorce case of oil billionaire Harold Hamm resulted in one of the biggest divorce settlements on record. The case had been dragging out for several months due to some nuances in Oklahoma law that made it difficult to determine how best to divide the Hamm’s fortune. But what would happen if the Hamms were dividing their assets in Texas?

As a Texas divorce attorney who handles complex property issues, Connatser Family Law’s Aubrey Connatser says, “Generally, divorce cases of wealthy couples are resolved in settlement negotiations. The more liquidity a couple has, the higher the likelihood of reaching an agreement, because there is plenty of money to go around. However, if the court is asked to address and rule on any intricate legal claims or issues that, the rulings on which could drastically change the size or value of the estate, it can derail settlement talks. Issues that are binary tend to create that conflict in divorce cases and make them much more difficult to resolve without the necessity of court intervention.”

According to Aubrey, who was recently recognized as one of Thompson Reuters Top 100 Attorneys in Texas as well as one of Thompson Reuters Top 50 Women Attorneys in the state, “If you’re preparing to divorce and considerable assets are at stake, you should be aware that there are several significant hurdles that typically complicate complex property settlements in Texas.” These include:

 

1. The Separate vs. Community Property Determination Can Slow the Divorce Process in Texas

As an example, you might see a wealthy couple with plenty of cash, or liquidity, but the husband thinks $50 million of the wealth is “separate property” (he believes he should keep it all), while she believes that $50 million is “community property” (she believes the money should be divided between them). They can’t agree, so they head to court.

“In Texas, property or assets attributable to one of the party’s “good will,” or in other words, property that resulted from intrinsic personal value that the one party brought to the table, is not divisible under Texas law,” counsels Aubrey. “If, on the other hand, the property was acquired with community funds (i.e. a winning lottery ticket purchased with community funds), it would be divisible as community property. A similar determination is one of the things confounding the Hamm case in Oklahoma,” she adds.

Says Aubrey, “If the disagreement is too big of a watershed issue, it can necessitate a trial. However, once threshold issues like these are resolved, through a summary judgment or preliminary motion, then a settlement is more likely to follow suit.”

 

2. Premarital and Cohabitation Agreements Can Help and Hinder Divorce Settlements

“In many cases where a premarital agreement was executed by the parties, it can make it easier or harder to reach a divorce settlement. Because premarital agreements often involve altering the impact of existing laws on the parties’ estate, a judge may need to decide if the agreement (or certain components of the agreement) is valid and how the agreements impact the allocation of assets between the parties,” Aubrey says.

Disputes can also arise if there is a disagreement as to whether a common law marriage exists or not. A cohabitation agreement can protect high-net-worth individuals from an adjudication of common law marriage.

Learn more about cohabitation agreements and common law marriage in this recent post: Unmarried and Living Together? Why a Cohabitation Agreement Is a Must

3. Following the Money Can Slow Down Complex Property Settlements

Another issue that can complicate divorces where millions or billions of dollars are at stake is tracing and following property and financial accounts through many years and a multitude of transactions. “This process can take time, and the expertise of a forensic accountant who can track everything for you is vital,” says Aubrey.

“It’s critical that both divorcing parties involved in a complex property case assemble a team of experts they can trust,” Aubrey advises. Depending on the case, you might need experts who can counsel you regarding:

  • Taxes
  • Forensic accounting
  • Business valuation
  • Trusts

4. Dividing Business Interests Can Further Complicate Texas Divorce Cases

This is especially true when one or both spouses own an interest in a business. “With complex business structures where one of the spouses is an owner, the portion of the business they own may be considered a community asset. If they own an interest in a business that is also owned by other third parties, that can further complicate division of that interest by and between the parties,” Aubrey says.

For example, if half of the stock in a manufacturing company is owned by third parties who are not parties to the divorce (often times other family members), the divorcing couple may have to deal with other stockholders or the business’s management and legal counsel. In addition to dealing with their spouse’s legal team, they also end up dealing with the lawyers, books, records, etc. of the business.

Aubrey finds that in some cases, “the business may even intervene and become party to the divorce suit. If a spouse of a partner in or member of a business entity wants access to the financial and other records of the business for purposes of the divorce suit, it can be really irritating and inconveniencing to the daily operations of the business and can result in acrimony between the partner/member spouse and his or her fellow partners/members.”

“Getting a competent valuation of a business interest is critical. Your team of experts can also counsel you about whether it makes sense to propose a buy-out (cash is king) or hang on for the long run if the value of the business is trending upward,” Aubrey says.

5. Retaining Counsel Who Is Inexperienced in Complex Property Settlements Can Put Your Case at Risk

“At the end of the day, whether you’re seeking a divorce with complex property issues in Texas, Oklahoma or anywhere else, speak with a divorce attorney who is experienced in complex property issues in your state. He or she can help you assemble a team of experts to secure the best possible outcome for your individual situation and devise a strategy for your case that accomplishes your goals, both short and long term,” advises Aubrey.

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