Do you need a prenuptial agreement?

If you were Harold Hamm, you may believe that to have been a good idea. The CEO of an oil company that has grown substantially with the development of the Bakken Shale oil fields, has reached a property settlement with his former spouse, Sue Ann Hamm.

While not a record for divorce property division, the $995.4 million payout is one of the largest. One positive in the settlement is that he need to pay it in a lump sum. Instead, he must pay $322.7 before the end of the year and then $7 million a month, for about eight years. 

With a total net worth of $14 billion, this should prevent him from needing to liquidate any of his oil holdings, and provides some savings, as the present value of $7 million paid in the last year of the settlement would be lower than if due today.

A prenuptial agreement would have allowed him to avoid this entirely, as that agreement would control the property distribution. Of course, a prenuptial agreement must be done properly to be enforceable.

One element that is important when drafting a prenuptial agreement is that both parties to the marriage should have their own attorney representing their interests. In the Hamm marriage, it should have been easy, as Sue Ann was an attorney for the company when she met her husband.

The agreement should also be equitable, as denying one party any share in property may be viewed with suspicion by a court and found invalid.

Even if you are not worth $14 billion, a prenuptial agreement can be useful in protecting assets like a cabin, vacation home or family heirlooms that could otherwise be split up or sold to satisfy a property settlement.

USA Today, “Ex-wife gets nearly $1B in divorce ruling,” Kevin McCoy, November 11, 2014