Divorcing Billionaires Battle Over Definition of Marital Property

Jack Overdeck and his wife Laura Overdeck are currently engaged in the largest divorce trial in state history.  Billions are at stake; both sides allege the other is failing to deal in good faith. Forbes ranks the Overdeck’s net worth at $8 billion dollars; one of the richest families in the country. Husband’s hedge fund has $75 billion dollars under management and an estimated annual revenue of $1 billion dollars. The parties have been married for 24 years; no prenuptial agreement. Husband purportedly offered a $633 million dollar cash settlement to his Wife before trial.

At issue is in this high-asset New Jersey divorce is whether Laura Overdeck can claim a marital interest in Husband’s stake in Two Sigma Securities as a marital asset. The battle boils down to what is considered marital property and what is considered premarital property in New Jersey. John Overdeck is the co-founder of Two Sigma Securities, founded immediately prior to their nuptials back in 2002. Husband has testified that, “the company had done substantial work and managed hundreds of millions of dollars before the marriage,” Husband’s attorney said in his opening statement.

 Husband’s counsel argues that the hedge fund is pre-marital in nature and thus not subject to division; the fund was founded two years prior to the marriage. Husband testified as to his distinct recollection that his Wife acknowledged that he, “owned a company and she wasn’t the type of person who would claim that would be hers.”

Husband’s legal team also recently asserted that Wife attempted to gain an unfair advantage in the case by allegedly inappropriately accessing Husband’s business records; conduct for which she was sanctioned by the family court judge. Much of the documentation she produced through these purported misdeeds during the discovery phase of the case has been precluded from being introduced as evidence. 

Wife’s position, on the other hand, is that the hedge fund was merely an “idea” of a company when the parties wed. Ms. Overdeck is requesting 35% of husband’s shares in the hedge fund and equal control over the company going forward. 

Although the family courts in New Jersey apply their own state law, this case illustrates the importance of proper characterization of assets as separate or marital. Michigan, of course, has its own set of laws on this crucial divorce topic. 

Unlike most states, Michigan does not have a “separate property” statute. Rather, Michigan law contains several seminal cases -known as common law- that instruct family courts on how marital property is divided, depending on the circumstances of a given case. 

The basic Michigan family law on this topic is set forth in a Michigan Supreme Court decision from 1992 known as Sparks v Sparks. The Sparks Court set forth the relevant factors to be considered by a family court judge when deciding whether a piece of property was separate or marital:

1. Duration of the marriage;
2. Contributions to the marital estate by each spouse;
3. Ages of the parties;
4. Health of the parties;
5. Life status of the parties [i.e. retired, still working, disabled];
6. Necessities and circumstances of the parties;
7. Earning ability of the parties;
8. Past relations of the parties;
9. Interruption of the personal career or education of either party; and
10. General principles of equity, which operates as a “catchall” category.

Like a determination of spousal support, Michigan law does not contain a rigid mathematical formula as to how family courts divide marital estates. One overarching general principle propounded by Michigan’s High Court is that the division must be equitable under the specific circumstances of each case. As any Michigan family law practitioner will tell you, the devil is always in the details. 

Not all common law factors referenced in the list above are relevant in every case. Also, the enumerated factors are often afforded different weight by the family court. Further, “equitable” does not mean “equal”. It does mean, however, "roughly congruent,” to borrow a 1994 phrase contained in a seminal Michigan Court of Appeals decision. 

When approaching a property division in divorce, the family court must first determine what is marital and what is separate property. This principle has been reinforced by a series of published decisions issued by Michigan’s intermediate appellate court in the mid-1990s. There is no statutory definition of either marital or separate property like there is in several other jurisdictions.

Marital property is generally used to describe any property the family court has determined is subject to division during a divorce proceeding. Put another way, marital property is anything the court does not find to be separate. For purposes of identifying what is "marital," the Michigan Court of Appeals has held that the marriage begins with the wedding and continues until a judgment of divorce, regardless of when the parties cohabitated or separated. Property a party owned before the marriage is generally considered separate property. Of note, however, is that separate property can be, in some cases, invaded. The invasion of separate property is a complex subject beyond the scope of this post.

We will be following this New Jersey family court trial and update you on how the court characterizes Husband’s hedge fund, i.e. separate or marital.  If the court finds that the company is a component of the marital estate rather than acquired prior to the marriage, it could mean billions instead of millions to Laura Overdeck.

Full Disclosure to our readers: this post was composed in its entirety by a human divorce lawyer and no AI agent played any role in its creation. 

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