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Divorce and the appreciation and division of stocks

One of the most difficult parts of the divorce process is the division of property. This can be particularly complicated for couples who have significant or complex financial assets--such as stock portfolios, vacation properties and retirement plans. In any case, it is critical that property and assets are divided appropriately in order to protect the financial interests of the parties involved.

In order to divide property as part of a divorce in Georgia, it needs to be determined which assets are separate property and which are part of the marital estate. Under state law, marital property must be divided fairly and equitably. Separate or premarital property is not subject to division, however in some cases a piece of premarital property increases in value during the marriage--and it may be determined that the amount of appreciation, but not the property itself, is marital property.

For example, Cherokee County residents may have heard that American oilman Harold Hamm is currently going through a divorce. Hamm, a billionaire, is the founder and controlling stakeholder of Continental Resources, Inc. Last month, it was reported publicly that a judge has ruled that Hamm's 125 million shares in the company are his premarital property. However, those shares appreciated in value substantially during his 26-year marriage, and that appreciation may be considered a marital asset.

The appreciation of premarital property during a marriage is a multifaceted concept, and different states handle this issue differently in divorce statutes. In general, the non-titled spouse may have a stake in the value of appreciation if the appreciation is deemed "active." This is appreciation that occurs as the result of some type of marital effort.

Parties to high-asset divorces, or any divorces involving complicated property division issues, should be sure to protect their rights by working with experienced family law attorneys.

Source: Bloomberg, "Continental Resources Founder's Stake at Risk in Divorce," Brendan Coffey, March 19, 2014

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