Most people understand that, in a SC divorce, marital property gets divided between the spouses and nonmarital property stays with the spouse that owns it... wait, nothing is ever so simple, is it?
Transmutation of marital assets in SC is a legal theory that can result in your nonmarital property becoming marital property subject to equitable division.
What is transmutation?
Transmutation of marital assets in SC is when the Court determines that you and your spouse intended to turn your nonmarital property into marital property. Now that you are getting divorced, that means that all "transmuted" property will be divided between you and your spouse...
Can transmutation happen on accident?
How can you avoid transmutation of marital assets in SC if your intent is to keep your nonmarital property separate?
Transmutation of Marital Assets - What is Marital Property?
Before we can talk about transmutation of marital assets in SC, we need to understand the difference between marital property and nonmarital property.
Marital Property in SC
Marital property is all the assets that you and your spouse have accumulated while you were married.
S.C. Code Ann. § 20-3-630(A) defines marital property as "all real and personal property which has been acquired by the parties during the marriage and which is owned as of the date of filing or commencement of marital litigation... regardless of how legal title is held."
It may include:
- Real estate, including the family home or other properties;
- Bank accounts or cash;
- Personal property like furniture, computers, or artwork;
- Retirement benefits or 401k plans;
- Business assets; or
- Any other items of value that are shared by the spouses.
These assets will be subject to "equitable division" by the family court as part of the divorce proceedings, which is why it matters whether property is classified as marital or nonmarital.
Nonmarital Property in SC
Nonmarital property may include:
- Property that a spouse owned before the marriage;
- Property that was received through an inheritance; or
- Property that was received through a gift to the individual spouse.
Most of the property that is owned by couples when they begin divorce proceedings is likely to be considered marital property. Even worse, some or all of the nonmarital assets can become marital assets through transmutation...
Transmutation of Marital Assets in SC - How Does it Work?
Nonmarital property is kept by the spouse that owns the property - unless the other spouse can successfully argue that the property has been "transmuted" into marital property.
Nonmarital property can become marital property when:
- The nonmarital property "becomes so commingled with marital property that it is no longer traceable;"
- It is titled in the names of both spouses; or
- It "is used by the parties in support of the marriage or in some other way that establishes the parties' intent to make it marital property." Wilburn v. Wilburn, 403 S.C. 372, 384, 743 S.E.2d 734, 740 (2013).
The most important question for the Court is whether the parties intended for the property to become marital property.
How Do You Prove Intent to Convert Marital Property?
If your spouse has property that they are claiming is nonmarital property and you want to take an interest in that property, you have the initial burden of proving that you and your spouse intended for the property to be shared:
"The spouse claiming transmutation must produce objective evidence showing that, during the marriage, the parties themselves regarded the property as the common property of the marriage." Jenkins v. Jenkins, 345 S.C. 88, 98, 545 S.E.2d 531, 537 (Ct. App. 2001).
Once you present objective evidence (something more than your own testimony) that the property is marital, then the burden shifts to your spouse to prove that it is not marital property.
The evidence that you present will depend on the facts of your case, but some common examples include:
- Putting the property in both names;
- Evidence that the property was transferred as a gift to the other spouse;
- Commingling of the property or funds;
- Using the property exclusively for "marital purposes;"
- Use of marital funds to build equity in the nonmarital property; or
- Exchanging the nonmarital property for marital property.
Simply using the nonmarital property to support the marriage is not enough to transmute it to marital property - there must be some additional evidence of the spouse's intent to convert the property. Johnson v. Johnson, 296 S.C. 289, 295, 372 S.E.2d 107, 111 (Ct. App. 1988).
How Can You Avoid Transmutation?
Since transmutation of marital assets in SC is determined by whether the parties intended to convert the property, you might think it can't happen accidentally.
You would be wrong - how can you ensure that your nonmarital property does not become marital property unintentionally?
- Make your intentions about the property clear - tell your spouse, children, or any interested parties that this is your property and you want to keep it that way;
- Insist on a prenuptial agreement before getting married, ensure that your prenup lists all nonmarital property, and specify that your intent is to keep the property separate;
- Do not commingle the property or funds - keep it in a separate bank account and do not use it for joint marital purposes;
- Make sure that the property is titled in your name alone, and do not add your spouse's name;
- Do not use marital funds to improve or to finance any property that you want to remain nonmarital; and
- Don't treat the property as marital property, and don't represent to anyone that it is joint, marital property.
Also, if you are involved in divorce proceedings where your spouse is attempting to claim that your nonmarital property is marital, participate in the proceedings.
In Brown v. Odom, decided by the SC Court of Appeals last month, significant property, including business assets, were transmuted to marital property - including a $48,445 in real estate and a $590,018 interest in business assets the husband had claimed were nonmarital.
In part, the Court relied on admissions made by the husband in the lower court litigation - although the husband did not actually make any admissions... When the wife sent "requests to admit" as discovery requests, the husband ignored them, including "admissions that Wife assisted in making business decisions for the LLC and that she contributed to the LLC's increased monthly net income."
When you ignore requests to admit, they are deemed to be admitted.
If you are considering separation or divorce, especially if there are personal or business assets at stake, call an experienced Myrtle Beach divorce attorney immediately to find out what your options are and what needs to be done to protect your interests.
Your Myrtle Beach divorce lawyer at Axelrod and Associates will help you to determine which assets are marital property, which are nonmarital property, what evidence you need to present to preserve your nonmarital assets, and how the Court is likely to divide your marital assets.