Chapter Seven Property

• Library: Marital Litigation in South Carolina (SCBar) (2020 Ed.)

Chapter Seven PROPERTY

A. In General

The division of marital property in South Carolina is governed by the Equitable Apportionment of Marital Property Act, S.C. Code Ann. §§ 20-3-610 through 20-3-690 (Supp.). The Act became effective on June 13, 1986, and codified much of the extensive case law covering property division in South Carolina.

South Carolina Code Ann. § 20-3-630 (Supp.) defines marital property as: "[A]ll 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 . . . ."

The philosophy behind equitable apportionment is explained in Walker v. Walker, 295 S.C. 286, 368 S.E.2d 89 (Ct. App. 1988):

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 at 288, 368 S.E.2d at 90.

The objective in dividing marital property is to sever all joint interests in the property as completely as possible, absent compelling reasons to retain joint ownership. The Court of Appeals outlined some basic principles in Johnson v. Johnson, 285 S.C. 308, 329 S.E.2d 443 (Ct. App. 1985):

First, the family court must begin with the premise that division and distribution of the marital home should be accomplished at the time of entry of the judgment of divorce. If possible, all issues between the parties should be resolved at that point so that disputes and irritants do not linger and present further incentives to litigation. The family court's objective should be to dissolve the marriage, sever all entangling legal relations and place the parties in a position from which they can begin anew.

Johnson at 311, 329 S.E.2d at 445. See also Smith v. Smith, 425 S.C. 119, 819 S.E.2d 769 (Ct. App. 2018) (reversing the family court's failure to sever the parties interest in a piece of real estate. "The family court failed to state a compelling reason for not severing the parties' interest in the property, and we do not find a compelling reason in the record on appeal.").

Family courts should avoid awarding fractional interests in marital property. In Shealy v. Shealy, 280 S.C. 494, 313 S.E.2d 48 (Ct. App. 1980), the Court of Appeals reversed an award of the exclusive use of the marital home to the wife until her death or remarriage. The Court of Appeals noted:

Due to their nature, domestic cases are difficult to end absolutely. Awarding fractional interests in real or personal property is not a satisfactory disposition to divorcing parties. It denies control of sale or encumbrances to both. Management, repairs, etc. are difficult to handle between persons at odds after divorce. Also, proven statistics have shown that women live longer than men thus furthering the uncertainty of an individual fractional interest. This could invite future litigation. In the future, Family Court judges are encouraged to make final dispositions of property interests where possible or, in the alternative, cite compelling reasons for awarding fractional or joint interests. Courts may determine incidental questions, afford complete justice and prevent multiplicity of litigation in divorce actions. McLean v. McLean, 273 S.C. 571, 257 S.E. 2d 751 (1979).

Shealy at 498 n.1, 313 S.E.2d at 50 n.1. The Court of Appeals cited Shealy with approval in Bass v. Bass, 285 S.C. 178, 328 S.E.2d 649 (Ct. App. 1985), and added that if trial courts fail to make a final disposition of property interests, they "must state compelling reasons for leaving loose ends." Shealy at 182, 328 S.E.2d at 352.

The family court is expected to follow four steps in dividing marital property:

(1) identify the marital property, real and personal, to be divided between the parties;
(2) determine the fair market value of the property so identified;
(3) identify the proportionate contributions, both direct and indirect, of each party to the acquisition of the marital property; and
(4) provide for an equitable division of the marital property.

Cannon v. Cannon, 321 S.C. 44, 467 S.E.2d 132 (Ct. App. 1996) (holding that it was error for the family court not to value the personal property in the marital home).

Equitable apportionment cannot be used in lieu of alimony where a spouse is not otherwise entitled to receive alimony.

The award that the trial judge made appears to be an attempt by the trial judge to compensate the wife for her failure to receive alimony, which was barred because of her adultery. Equitable distribution cannot be used because alimony is barred.

Wannamaker v. Wannamaker, 305 S.C. 36, 41, 406 S.E.2d 180, 183 (Ct. App. 1991) (citing Berry v. Berry, 294 S.C. 334, 364 S.E.2d 463 (1988)).

Which spouse is entitled to income from marital property during an appeal is an open question. In Hunt v. Hunt, 311 S.C. 355, 428 S.E.2d 899 (Ct. App. 1993), the trial court awarded the wife earnings on a portion of the husband's pension fund. An appeal by both parties followed. After the Supreme Court affirmed the equitable distribution award and increased the alimony award, the trial court conducted a hearing to determine who was entitled to receive the earnings on the wife's portion of the pension during the pendency of the appeal. The family court ruled in favor of the wife. The husband appealed, arguing that, because the wife was the primary appellant in the appeal and because she was not successful in her appeal of the equitable distribution award, she was akin to a judgment creditor and therefore not entitled to any earnings, as an unsuccessful judgment creditor is not entitled to interest. The Court of Appeals rejected this position, but it did not rule directly on the merits of the husband's argument. It held that he had not preserved this question for appeal because he had not raised this argument with the trial court and there was no evidence that he made a SCRCP, Rule 59(e) motion. The Court of Appeals also found that the division of the pension was not an issue in the original appeal to the Supreme Court. The question is, therefore, still open.

A beneficiary may contract away a right to insurance proceeds through a separation or property settlement agreement, even if the beneficiary designation is not formally changed, although a divorce does not itself affect a beneficiary's right to insurance proceeds. Estate of Revis v. Revis, 326 S.C. 470, 484 S.E.2d 112 (Ct. App. 1997) (holding that the second wife who was the named beneficiary of insurance policies was entitled to receive the benefits of the insurance policies rather than children produced during the first marriage because the separation agreement between the deceased and his second wife did not clearly indicate an intention to relinquish the second wife's right to claim the proceeds at the death of the insured).

A decree of divorce automatically severs any joint tenancy in real estate held by a husband and wife with no other tenants and vests the interests in both parties as tenants in common, unless otherwise provided by a court. South Carolina Code Ann. § 27-7-40(a) (viii) (Supp.) was enacted in 2000 and provides:

Any joint tenancy in real estate held by a husband and wife with no other joint tenants is severed upon the filing of an order or decree dissolving their marriage and vests the interest in both the parties as tenants in common, unless an order or decree of a court of competent jurisdiction provides otherwise.

Subsection (c) says:

Except as expressly provided herein, any joint tenancy severed pursuant to the terms of this section is and becomes a tenancy in common without rights of survivorship. Nothing contained in this section shall be construed to create the estate of tenancy by the entireties. Nothing contained in this section amends any statute relating to joint tenancy with rights of survivorship in personal property but affects only real estate. The provisions of this section must be liberally construed to carry out the intentions of the parties. This section supercedes any conflicting provisions of Section 62-2-804. [relates to effect of death on joint tenancy]

The purpose of this legislation is unknown to the author. Its only apparent implication to family law issues is that, if the intention upon granting a divorce is to continue a joint tenancy in real estate held by a husband and wife, the family court's order must specifically provide for this or the joint tenancy will be converted into a tenancy in common without rights of survivorship.

B. Jurisdiction

1. Subject Matter Jurisdiction

As discussed more fully in the chapter on jurisdiction, if the family court lacks subject matter jurisdiction, it cannot obtain it. A challenge to subject matter jurisdiction can be raised at any time during the proceeding, even at the appellate level. Any action taken by a court without subject matter jurisdiction is void. This includes an objection that statutorily imposed time limits were not observed.

Before 1976, South Carolina courts had no specific statutory authority to adjudicate the property rights of parties. In Piana v. Piana, 239 S.C. 367, 123 S.E.2d 297 (1961), the Supreme Court determined that the power to adjudicate property rights derived from Section 20-105 of the 1952 Code (presently codified as S.C. Code Ann. § 20-3-50 (1976)) which states: "Actions for divorce from the bonds of matrimony shall, except as otherwise provided, be only in the equity jurisdiction of the court of common pleas"). Piana held that any property claims, whether real or personal, could be settled by the divorce court.

Perhaps the most unusual aspect of Piana, however, is that the family court did not grant a divorce to either party. The Supreme Court said that equity powers gave the...