Equitable Distribution Of Marital Property
Table of Contents
Frequently Asked Questions
WHAT IS CONSIDERED MARITAL PROPERTY IN SOUTH CAROLINA?
Marital property generally includes assets and debts acquired by either spouse during the marriage which is defined as from the date of marriage until the date of filing of a divorce case. This can include real estate, retirement accounts, investment accounts, businesses, vehicles, and personal property.
Even if an asset is titled in only one spouse’s name, it is still considered to be marital property if it was acquired during the marriage, unless it was acquired using nonmarital assets. Likewise, debts incurred during the marriage are typically treated as marital obligations regardless of whose name appears on the account, unless the debt was not incurred to support the marriage.
The Family Court’s role is to determine the value of marital assets and debts and divide them amongst spouses after consideration of appropriate equitable division factors.
IS MARITAL PROPERTY DIVIDED ON A 50/50 BASIS IN SOUTH CAROLINA?
Not necessarily. South Carolina is an equitable distribution State, which means that the Court must consider several factors in determining an overall marital property division.
While courts often begin with the idea that each spouse should receive an equal share of the marital estate, this assumption can be swayed depending on the length of the marriage, the contributions of each spouse to the marital estate, marital misconduct of either spouse, and the overall financial circumstances of each spouse.
Because each case is unique, the final division of assets may not be a 50/50 division.
WHAT HAPPENS TO PROPERTY ACQUIRED BEFORE MARRIAGE?
Property acquired prior to marriage is generally considered nonmarital property and is not subject to division by the Family Court. Examples include assets owned before the marriage, inheritance received by one spouse, and gifts made specifically to one spouse.
However, certain circumstances can change how property is treated. If nonmarital property becomes commingled with marital assets and is used to support the marriage, or if nonmarital assets are retitled in both spouses’ names, nonmarital assets can be converted to marital and may become subject to equitable division.
For this reason, determining whether property is marital or nonmarital can become a complicated legal and financial issue in many divorce cases.
What Is Property Division In A South Carolina Divorce?
When a married couple files for divorce, one of the primary issues the Family Court must resolve is how to divide the parties’ marital property and debts. This process is called equitable distribution in South Carolina.
In circumstances where one spouse incurred significant debt that was not used to support the marriage or engaged in habits designed to dwindle the marital estate, such as gambling, the Court should consider these factors in determining an overall division.
The only assets and debt subject to division are those acquired during the marriage or from the date the parties married until the date a case has been filed. Such assets and debts are considered marital and therefore subject to the Court’s powers to divide as it deems fit. Nonmarital assets are those acquired prior to the date of marriage and that have not changed their character to marital by virtue of a spouse adding the other spouse as an asset owner, or otherwise transmuting the nonmarital asset to marital through his her or her conduct.
Marital property can include many different types of assets, including real property, retirement accounts, investment accounts, businesses, vehicles, and personal property earned during the marriage. Likewise, debts accumulated during the marriage, such as mortgages, credit cards, loans, or other financial obligations, may also be divided between the spouses.
Accurate financial information is important in any property division case. Both parties are required to disclose their income, assets, and debts so that the Court can properly evaluate the marital estate. If financial information is incomplete or inaccurate, the division of property may not reflect the true value of what was accumulated during the marriage which then affects what each spouse receives in value from the marital estate.
The Family Court ultimately has the authority to decide how marital property and debt will be divided if the parties cannot reach an agreement. In making that decision, the Court reviews financial records and other evidence and hears testimony presented by the parties before determining a distribution of the marital estate. A final division of assets and debts does not take place until a trial on the merits of the case. In other words, the Court will not divide marital assets and debts at a Temporary Hearing.
Marital Property vs. Nonmarital Property
Before property can be divided in a divorce, the court must determine which assets are considered marital property and which are considered nonmarital property. This distinction is important because only marital property is subject to division by the Family Court.
Assets Commonly Considered Marital Property
Marital property generally includes most assets and debts acquired by either spouse during the marriage. Even if property is titled in the name of only one spouse, it may still be considered marital property if it was obtained during the marriage. Property does not have to be titled in both spouses’ names for it to be considered marital property.
Examples of marital property often include real estate purchased during the marriage, retirement accounts or pensions accumulated while married, investment accounts, business interests, vehicles, and other personal property. Debts incurred during the marriage are also typically considered marital obligations. Mortgages, credit cards, business loans, and other financial liabilities may all be considered part of the marital estate and subject to division by the court.
Property That May Be Considered Nonmarital
Certain property may be classified as nonmarital property and therefore not subject to equitable division. Assets owned by a spouse prior to the marriage are generally considered nonmarital property. Inheritance or gifts received by a spouse may also remain nonmarital property so long as not deposited into a joint account and used for marital purposes, or otherwise retitled into both spouses’ names.
Oftentimes, there are questions as to character of an asset, i.e., one spouse claims an asset is nonmarital while the other claims it has become marital. In such circumstances, additional information must be obtained to properly characterize the asset which may also become an issue the Court must deal with and classify at a trial.
How Commingling Can Turn Nonmarital Property Into Marital Property
Nonmarital property may be transmuted into marital property through what is known as “commingling” or “transmutation”. This occurs when nonmarital assets are mixed with marital assets or used in a way that demonstrates both spouses contributed to or benefited from the property during the marriage. In the case of liquid funds such as funds in a depository account, the spouse claiming a nonmarital asset has become marital must show evidence that the nonmarital asset was not only deposited into a joint account but also used to support the marriage.
Another example of transmutation occurs from determining the conduct and intent of a spouse. In such instance, a spouse may have owned real property prior to the marriage. If the property was financed in both parties’ names, although not necessarily deeded in both parties’ names, this together with other conduct may equate to a transmutation of the nonmarital asset to marital.
If a Court determines the nonmarital asset was commingled or transmuted, it is subject to division by the Court along with other marital property.
How South Carolina Courts Divide Marital Property
The Court attempts to divide marital property in kind, meaning that it assigns property to each spouse. In the event an in-kind distribution is not practical, it can order a marital asset be sold and the proceeds divided in accordance to the overall division percentages assigned to each spouse.
The Court must weigh several factors in determining an equitable distribution award including the duration of the marriage, direct and indirect contributions to the marital estate, financial conditions of the parties, whether a party has custody of minor children, and marital fault
Hidden Assets And Financial Discovery In Divorce
Full financial disclosure is required in divorce proceedings. Both spouses must provide accurate information regarding their income, assets, and debts so that the court can properly evaluate the marital estate. When there are concerns that financial information may be incomplete or inaccurate, legal counsel can use formal discovery tools to obtain necessary financial and asset records.
Discovery tools may include document production requests, written interrogatories requiring sworn answers, and subpoenas issued to banks, employers, or other financial institutions. These tools allow attorneys to gather financial documents and obtain information needed to understand the true scope of the marital estate.
In more complex cases, financial experts may be involved to assist with analyzing records and tracing assets. Forensic accountants may review bank statements, business records, tax returns, and other financial documents to identify hidden income or undisclosed accounts, and to value certain assets like retirement accounts and stock. Asset tracing may also be necessary when financial transactions are complicated or when funds have been moved between multiple accounts or entities.
These investigative tools help ensure that the court has a clear and accurate picture of the marital estate before making decisions about how property should be divided.
Business Interests And Complex Financial Assets
Divorce cases involving significant assets often include financial interests that require careful valuation and analysis before they can be divided. Business ownership can be more complex in a divorce proceeding. Closely held businesses, professional practices, and partnership interests may represent a substantial portion of the marital estate. Determining the value of these assets typically requires a detailed review of financial records, business operations, and ownership structures. In many cases, financial experts are used to evaluate a company’s fair market value or other appropriate form of valuation.
Complex financial assets can also make property division more challenging. Executive compensation packages may include restricted stock, deferred compensation, or stock options that vest over time. Investment portfolios, retirement accounts, and other long-term financial instruments may also be subject to division.
Real estate holdings can further complicate the process. Some couples own multiple properties, including investment properties, commercial real estate, or vacation homes. Each asset must be carefully evaluated so the Court can determine its value and decide how it should be distributed between the parties. Because these assets can involve complicated financial and tax considerations, accurate valuation is essential before any division of property takes place.
Why Property Division Requires Experienced Legal Counsel
Property division can have long-term financial consequences for both parties involved in a divorce. Without a clear understanding of the marital estate and the value of the assets involved, it is possible for one party to agree to a settlement or have the Court make a determination that does not fully reflect the true value of what was accumulated during the marriage.
Appropriate legal representation plays a crucial role in protecting a client’s financial interests throughout the process. This includes identifying all marital assets, ensuring that financial disclosures are complete and accurate, and working with financial professionals when necessary to determine the value of complex assets such as businesses, investment accounts, or retirement benefits.
Tax implications must also be considered when dividing property. Certain assets may appear equal in value on paper but carry very different tax consequences when they are sold or transferred. Understanding how those issues may affect the overall division of property can help prevent unintended financial consequences after the divorce is finalized.
Having experienced legal counsel can also help prevent unequal settlements that may occur when financial information is incomplete or when assets are not properly valued. A thorough review of the marital estate ensures that the court has accurate information before making decisions about how property should be divided.
Protecting Your Financial Future During Divorce
Property division is often one of the most important financial issues resolved in a divorce. Ensuring that assets are properly identified, valued, and divided requires careful legal and financial analysis. At Warner Law, we work with clients to understand the full scope of the marital estate, address complex financial issues when they arise, and pursue a fair outcome that protects their long-term financial interests.
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My late father, Jan Warner, was an accomplished and widely known family law attorney and nationally syndicated author in South Carolina, so this area of law runs in my blood. It is all I have ever known, and I cannot imagine doing anything else.