If you are going through a divorce in South Carolina, the court has the jurisdiction to divide your marital assets and the debts. It is therefore important to understand what assets are included in this division.
What is marital property? What is marital debt? Generally speaking, this is determined by looking at a timeline. Marital property is defined as any property that is acquired from the date of the marriage until the date one of the spouses files for marital litigation, either an action for separate support and maintenance or divorce.
Any property or debt acquired during that time period is going to be subject to division by the court. Each party, by virtue of being in the marriage, acquires an interest in any property obtained during the marriage. Regardless of how legal title is held, how the property is acquired (with a few exceptions), or which spouse acquires it, if either spouse acquired the property during the marriage, then generally speaking, it's going to be considered marital property is going to be subject to division by the court.
There are some exclusions to this general rule however, and I will discuss those in more detail below. The first exception concerns property obtained by inheritance. If you or your spouse inherit or obtain by gift, a sum of money, property or anything else of value then that property, so long as it remains separate from any other marital property, will not be subject to division by the court. For example, if you received $10,000 by gift or by inheritance, it is important to keep that money set aside in a separate account so that it can be traced. If the inherited money is deposited into an account and is commingled with marital money, then it could be considered transmuted into marital property ultimately subject to division by the court. It is therefore important to keep any inherited property, or property obtained by gift, separate and apart from marital property.
The second exception concerns any property acquired before the marriage. Any property that you or your spouse acquired prior to the marriage is not going to be subject to division by the court. Additionally, any property that you obtain in exchange for the non marital property that I just described is going to be excluded. So, if you inherit $10,000 and then take that $10,000 and exchange it for a vehicle, then that vehicle would retain the non marital character of the $10,000 cash and be excluded from the marital estate. Similarly, if you or your spouse owned property prior to the marriage and during the marriage that property is converted into something different, the new property, despite being acquired during the marriage will be excluded from the marital estate.
Third, any property the parties agree to exclude from the martial estate will be excluded. This can be accomplished by prenuptial or antenuptial agreement. If the two parties contract with one another to exclude certain items of property from the marital estate, then the court is generally going to honor that agreement. However, in order for the court to do so, both parties must have entered into the agreement voluntarily, after a complete financial disclosure, and both parties should be represented by independent counsel.
Lastly, an increase in value of non marital property is generally going to be excluded. One of the places where we see this most relates to the appreciation of real estate acquired by one spouse prior to the marriage. If one spouse owns real property prior to the marriage and that property increases in value, during the marriage, then the increase in value, although accumulated during the marriage, will be excluded from the marital estate. However, there are some exceptions to this, especially if the spouse contributed to the increase in value. South Carolina courts do not have subject matter jurisdiction to divide non marital property in marital litigation. It is therefore crucially important that all property owned by the parties is properly identified and characterized before any division of assets and/or debts is negotiated or determined by the court.