Asset Division in Divorce

Dividing Non Martial Property In Divorce: Can It Be Done?

Marital property is all property acquired by a married couple during their marriage, regardless of how the property is titled. But what about property owned by a person prior to the marriage- will this also be thrown into the mix?

Property owned prior to a marriage is generally going to be the separate property of the titled owner and will not be divided between the parties with the rest of the marital property. But sometimes property owned prior to the marriage and titled separately during the marriage can become marital property subject to division. How can this be?

South Carolina law says that non marital, separate property can be “transmuted”, or changed, into marital property during the marriage. Last week in the matter of McMillan v McMillan the South Carolina Court of Appeals reversed the trial court for finding a business owned by Husband prior to the marriage had been “transmuted” to marital property.

Mr. McMillan had owned a business for nearly 20 years prior to marrying his Wife. During the marriage Wife worked in the business and the business provided the parties with an income. While the trial court found this was enough to make the business a marital asset, the Court of Appeals did not agree. The Court pointed out that:

Transmutation occurs if the property is utilized in support of the marriage or in such a manner as to evidence an intent to make it marital property. Transmutation is a matter of intent to be gleaned from the facts of each case.

In finding that the parties did not intend for Husband’s business to become marital they looked to the specific behavior of each party during the marriage as it related to Husband’s business. The Court found:

  1. Husband never placed the business in Wife’s name
  2. No marital funds were contributed to the business during the marriage
  3. Wife performed part-time work for the company for several years and earned a $52,000 annual salary
  4. Wife did not make any business decisions
  5. Husband did not own the entire company, but rather was a fifty-fifty partner
  6. No evidence was presented of marital funds being used to support the business

If a person alleges that property owned during the marriage has become a marital asset subject to equitable division, they have the burden to show that it was the intent of both of them to make this property a marital asset. While this can be difficult, the McMillan case gives us a good outline of what to look for:

  • How is the property titled?
  • Is there any debt associated with the property and, if so, how is the debt titled?
  • Were marital funds used to maintain and support the property?
  • Did the property contribute significantly to support the marriage?

Gathering the necessary information regarding “intent” early in a divorce case is important. Make sure all titles, bank statements, mortgages, and other loan documents pertaining to the property in question have all been obtained. These documents will go a long way in helping to establish “intent”.

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