Equitable Apportionment (Equitable Distribution) Flashcards
What law in South Carolina governs the division of marital property?
The Equitable Apportionment of Marital Property Act, SC Code 20-3-610 through 20-3-690.
What is the philosophy behind Equitable Apportionment?
“Equitable distribution is based on a recognition that marriage is, among other things, an economic partnership. Upon dissolution of the marriage, property accumulated during the marriage should be divided and distributed in a manner which fairly reflects each spouse’s contribution to its acquisition, regardless of which spouse owns legal title.”
Walker v. Walker, 295 S.C. 286, 368 S.E.2d 89 (Ct. App. 1988)
What is the objective of Equitable Distribution?
(1) To sever all joint interests in property as completely as possible by the time of entry of judgment of divorce;
(2) It should be such a complete division so that “disputes and irritants do not linger and present further litigation.”
(3) It should “place the parties in a position from which they can begin anew.”
(4) It should avoid awarding fractional interests in property so the parties are denied control of sale and do not have to communicate about management, repairs, and passing title after death.
What are two (2) ways that Equitable Apportionment differ from Alimony?
(1) The division of property is not meant to compensate a spouse;
(2) These property transfers between spouses are not taxable.
What happens to a joint tenancy upon divorce?
A divorce decree will automatically sever any joint tenancy in real estate held by H and W with no other tenants and it will become a tenancy in common (UNLESS the divorce decree specifically states otherwise). The spouses no longer have a right of survivorship to the property.
What happens if there is a third party involved in the ownership of marital property?
The court can make the 3rd Party a party to the action and the property of 3rd Parties can be apportioned by the Court if it is determined to be marital property.
What happens if one spouse dies before the final decree is issued which equitably apportions the property?
The death of one of the parties to a divorce proceeding does not affect the jurisdiction of the Family Court to equitably apportion marital property as long as the litigation was initiated before the death of the party.
Can Equitable Distribution be secured by life insurance?
Unlike alimony, equitable distribution may not be secured by life insurance ABSENT SPECIAL CIRCUMSTANCES.
What is the step-by-step process for equitably apportioning a marital estate?
(1) Identify each asset and debt (list them, find or trace any missing items, and use discovery tools available);
(2) Characterize each asset and debt as either marital or non-marital;
(3) Value each marital asset and debt;
(4) Apportion the assets and debts according to the equities.
What is marital property?
SC Code 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 title is held…”
What five (5) items are excluded from marital property?
SC Code 20-3-630(A):
(1) Property acquired by inheritance, devise, bequest, or gift from a party other than the spouse; [interspousal gifts ARE MARITAL PROPERTY];
(2) Property acquired before the marriage or property acquired after the happening of the earliest of:
(a) entry of a pendente lite order in a divorce or separate maintenance action;
(b) formal signing of a written property or marital settlement agreement; or
(c) entry of a permanent order of separate maintenance and support or of a permanent order approving a property or marital settlement agreement between the parties;
(3) Property acquired in exchange for property described in (1) and (2);
(4) Property excluded by written contract of the parties (includes an antenuptial or premarital agreement);
(5) Increase in value of non-marital property unless increase resulted from efforts of the other spouse (special equity situation).
What is required for a Pre-Nuptial Agreement to be presumed fair and equitable?
SC Code 20-3-630(A)(4):
An antenuptial agreement must be considered presumptively fair and equitable so long as it was voluntarily executed with both parties separately represented by counsel and pursuant to the full financial disclosure to each other that is mandated by the rules of the Family Court as to income, debts, and assets.
What is a Special Equity Interest?
If a spouse makes a material contribution to the increase in value of the other spouse’s non-marital property, he/she may be entitled to a special equity interest in the increased value.
SC Code 20-3-610: “During the marriage a spouse shall acquire, based upon factors set out in 20-3-620, a vested special equity and ownership rights in the marital property as defined in 20-3-620, which equity and ownership right are subject to apportionment between the spouses by the Family Court in this State at the time marital litigation is filed or commenced as provided in 20-3-620.
What is a Material Contribution?
A direct or indirect contribution that results in an increase in value of the property; can be ongoing (such as maintenance) or could be permanent improvements. Contributions from marital funds count as material contributions.
What are the six (6) specific types of marital property that may require special attention?
(1) Retirement Assets
(2) Professional Degrees
(3) Proceeds from Legal Actions/Personal Injury Awards
(4) Insurance proceeds
(5) Business Interests/Stock Options
(6) Certain other benefits
What is a Defined Contribution Plan?
This retirement plan provides an individual account for each participant. The benefits are based on the amount contributed and are also affected by income, expenses, gains, and losses. (Ex: 401(k) plans, 403(b) plans, Employee Stock Ownership Plans, and Profit Sharing Plans).
