Harold Hamm began his career as an “oilman” scrubbing oil barrels. Within a few years, he drilled a 75-barrel-a-day oil well in Oklahoma. He used the profits from that well to pay for and attend university classes in geology.
In 1967, he founded Continental Resources, and in 1988, he married Sue Ann Arnall, a lawyer at the company. This was about six months after Harold’s first divorce was issued by the court and only weeks after the court imposed a cooling-off period.
This article is written by estate planning and taxation attorney John M. Goralka, founder of The Goralka Law Firm, where he helps clients protect their assets, minimize income and estate taxes and protect and enhance their legacy.
Subscribe to Kiplinger’s Personal Finance
Be a smarter, better informed investor.
Save up to 74%
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.
Profit and prosper with the best of expert advice – straight to your e-mail.
At the time of his marriage to Sue Ann, Harold was a very successful wildcatter with a proven track record for finding oil. He acquired oil leases in Canada, Montana and North Dakota.
Continental Resources’ biggest find occurred when Harold discovered the Bakken oil field. By the end of 2010, oil production was 458,000 barrels a day. In November 2024, it was 1.2 million barrels per day.
Good times and bad
While Harold’s business boomed, his marriage was troubled. In 1998, Harold learned that Sue Ann was looking for a divorce attorney. Harold was worried that her divorce petition could have a detrimental impact on his business. He filed his own divorce petition.
Harold and Sue Ann had no premarital agreement. The divorce was to be decided under Oklahoma law, where money earned by a spouse through skill or expertise may be a part of a divorce settlement, but money found or attributed to blind luck, changing conditions or circumstances beyond the parties’ control is not part of a divorce settlement.
Harold made the argument that his discovery of the oil fields was simple luck, not due to his skill or expertise. The court did not fully accept that argument.
The divorce proceedings were bitter, angry and emotionally charged. Many of the filings and hearings were confidential, but those that were publicly available illustrated the acrimonious nature and the legal posturing involved.
A $974.8 million check
As a settlement offer, Harold wrote Sue Ann a personal check for $974.8 million (you can see an image of the check at The Guardian). His theory seemed to be that if she cashed the check, then an appeal of the settlement would be more difficult. He also reportedly paid Sue Ann more than $20 million during the divorce proceedings.
Sue Ann cashed the check in 2015 and continued with her appeal on the grounds that the oil assets were being undervalued. Harold also appealed, asserting that the $974.8 million award was too high and that the oil-related assets were no longer worth as much because of a sharp drop in oil prices.
Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.
The divorce court eventually awarded Sue Ann assets worth $1 billion. The judgment required Harold to pay $320 million by the end of 2014, with a balance to be paid of about $7 million each month thereafter. The judge placed a lien on 20 million shares of Continental stock worth $1 billion.
What the Hamms should have done
Much of the drama, legal fees, risk of loss and heartache could have been avoided by using a premarital agreement. That would have allowed them to negotiate the terms of a divorce, including support, division of assets, payment of legal fees and related matters, without the emotionally charged environment caused by the marriage falling apart.
Our practice is to combine a premarital agreement with a confidentiality agreement to prevent unnecessary publicity and discussion of assets and related issues. That might have minimized the public nature of this divorce.
Greater asset protection can be obtained by holding assets in a separate property trust to better confirm the separate nature of assets. Using limited liability companies (LLCs) or other business entities, coupled with a domestic asset protection trust (DAPT), would provide even greater protection.
A DAPT is an irrevocable trust established under the special laws of a jurisdiction that allow the settlor of the trust (trust creator) to be a beneficiary and still protect trust assets from the settlor’s creditors, which could include a soon-to-be-former spouse.
The following states use asset protection trusts: Alaska, Delaware, Hawaii, Michigan, Nevada, New Hampshire, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee and Utah.
Related Content
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
Source link
:max_bytes(150000):strip_icc()/MSFTChart-6a12036e1f8f48828144a419dacb470c.gif?w=390&resize=390,220&ssl=1 "Watch These Microsoft Price Levels as Stock Closes Above 0 for First Time")
