SPLITTING-UP: Equitable Division of Marital Assets and Debts
Part of almost any divorce is dividing the Marital Estate. In South Carolina, the law requires “equitable division.” This includes identification, valuation, and fair division of the Marital Estate. What’s fair is largely in the discretion of the judge, which is one reason negotiating a settlement may be in your best interest.
In South Carolina, the Marital Estate is defined by Code Section 20-3-630. Generally speaking, the Marital Estate includes all assets and debts acquired during the marriage (bank accounts, cash, retirement plans, credit cards, lines of credit, houses, time-shares, vehicles, boats, IRS debt, stocks, frequent flyer benefits, furniture, art, antiques, collectibles, military benefits, etc.). There are some exceptions, however, such as inheritance and gifts, which even if acquired during the marriage are usually not marital property. This is not to say an inheritance or gift can never be marital property. If individual assets are commingled with marital property or the other spouse’s assets, they may be subject to equitable division. For instance, if inheritance funds are deposited into a joint account, they would then be subject to equitable division by the Family Court. Likewise, “transmutation” and “special equity” are legal doctrines whereby individual assets may become subject to equitable division if they have been treated by the spouses as marital property or if significant contributions are made by the non-owner spouse. For example, where an individual owns a home at the time they get married, if their spouse contributes to the mortgage payment, makes substantial improvements, pays the taxes, etc., the Family Court may deem the home marital property and divide its value between the two spouses. How property is titled has no bearing on how it will be divided by the Family Court. The value of marital assets can be determined through appraisals, market analysis, estimated resale value, military regulations, expert opinion, and various other means.
The Court will also determine each spouse’s responsibility for the debts acquired during the marriage. As with assets, it makes no difference who’s name the debts are held in. Typically in the eyes of the Family Court any asset acquired and any debt incurred during the marriage is the asset or debt of both spouses. In deciding how to divide the marital debt, one factor the Court will consider is for what purpose the debt was acquired. For example, credit card debt used to purchase items for the household will likely be divided fairly equally; whereas, if one charges a vacation with their paramour, it’s not likely their spouse would be required to contribute to that debt.
You must file an action for Divorce or Separate Support and Maintenance in order to stop the accumulation of marital assets and debts, and secure the marital estate. Courts can not turn back the hands of time and the Family Court will usually not un-do what’s been done during the marriage. If a spouse cashes in his or her 401(k) and gambles the money away in Vegas before the other spouse files an action in the Family Court, it is unlikely the Court would require him or her to reimburse the other spouse any portion of those funds unless it can be shown it was done in contemplation of the Family Court action. Another way to say it is what’s done is usually done. This is one reason it may be important to file very soon after your separation.
Each spouse is generally deemed to have a fairly equal interest in the Marital Estate; although, there is no rule requiring the Marital Estate to be divided 50/50. The Court will consider many factors in deciding what is a fair division. This will include the length of the marriage, marital misconduct (adultery, physical cruelty, drug abuse, alcoholism), both spouse’s income, alimony, custody, etc. These factors are spelled out in SC Code Section 20-3-620.
Even in a relatively short marriage it is important to consult with an attorney when going through a separation or divorce. You may be entitled to more than you realize. If you have very few assets, it is still important to know your rights regarding marital debt, and to understand your exposure to future debts that may be incurred by your spouse.
To schedule an appointment with Ms. Adkins, call (843) 486-2442 or email her at Dana@DanaAdkinsLaw.com.