Marital Property and Equitable Distribution

Divorce begets marital property.

Once the decision to seek a divorce is made, many other considerations follow.  A major process within the divorce scenario is the division of the marital assets.  Before the property can be divided, the parties must determine what their marital property is.  And, as many who have gone before have come to realize, the determination of marital property is not an easy one, nor is it clearly defined.  And, once it is defined as marital, the division of that property between the spouses is another hurdle in the path to divorce.

In general, marital property is any property acquired by the parties during the course of the marriage that is owned as of the date of the filing or commencement of the marital litigation.  Other property considered to be marital includes:  gifts between spouses during the marriage; vested and non-vested benefits/funds accrued during marriage; real property acquired before or during marriage that is held as joint tenants with right of survivorship; appreciation of marital assets due to the efforts of a spouse during the course of the marriage; increases in retirement plans, i.e. 401(k), that predate the marriage.

Non-marital property includes:

  • Property acquired by inheritance, devise, bequest or gift from someone other than the spouse;
  • Property acquired by either party before the marriage and property acquired after the happening of the earliest of either: (a) a temporary order in divorce/separate maintenance action; (b) formal signing of written property or marital settlement agreement; or (c) the entry of a permanent order of separate maintenance or of an order approving a property/marital settlement agreement;
  • Property acquired by either party in exchange for property in the first two listed above;
  • Property excluded by written contract;
  • Any increase in value of non-marital property, except to the extent that the increase in value happened because of an effort from the other spouse.

As the last item listed as non-marital property suggests, non-marital property can become marital property. Non-marital property becomes marital property (and subject to equitable distribution) where the property is commingled with marital property to the extent it becomes impossible to differentiate between the two.  Transmutation of non-marital property into marital property, for example, occurs when the property is titled in both spouses’ names, the property is used by the spouses in support of the marriage, or the spouses use the property in such a way that it shows an intent to make the property marital property.

Once the parties or the Family Court determines which property is marital, the marital estate is then subject to equitable distribution.

The state of South Carolina is an Equitable Distribution state, which means that the Family Court is given the job of dividing the marital estate in a fair and equitable manner.  To assist the Family Court with that vague mandate, Judges are equipped with the ability to consider many factors in determining exactly what is fair and equitable.

The following factors can be considered, where appropriate, by the Family Court in its quest for equitable distribution of a marital estate:

  1. Desirability of retaining the marital home when (a) it is desirable to do so, (b) it is in the best interest of a child or party, and (c) it is financially feasible to retain;
  2. Need for additional training or education in order for a spouse to achieve one’s income potential;
  3. Vested retirement benefits of each spouse;
  4. Contribution to the marriage by each spouse, including care and education of kids, services as a homemaker;
  5. Support being paid or received by either spouse with respect to any prior marriage or child;
  6. Separate maintenance (temporary spousal support) or alimony which has been awarded;
  7. The duration of the parties’ marriage;
  8. Child custody arrangements, insofar as property affects those arrangements;
  9. The physical health of the spouses, and any related special needs;
  10. The emotional health of the spouses;
  11. The tax aspects and implications of divorce, i.e. deduction benefits;
  12. The overall financial and economic circumstances of parties, including each spouse’s income, earning potential, etc.;
  13. Any fault or marital misconduct of the party;
  14. Liens or encumbrances on marital property and separate property/debts;
  15. Non-marital property of each spouse;
  16. Other factors necessary to do equity and justice between the parties.

Importantly, the parties can reach an agreement as to the marital property’s division, which is entered into voluntarily by both parties, signed, and then presented to the Family Court for approval.