Protecting Nonmarital Retirement Accounts in South Carolina Divorces

• View Larger Image

Protecting Nonmarital Retirement Accounts in South Carolina Divorces

Key Takeaways from Carter v. Carter: Protecting Nonmarital Retirement Accounts in South Carolina Divorces
South Carolina Court of Appeals, June 20, 2024

The South Carolina Court of Appeals recently issued an important decision in Carter v. Carter that clarifies critical issues surrounding the division of retirement accounts, asset valuation dates, and alimony in divorce cases. This case offers valuable guidance for anyone navigating property division in a South Carolina divorce.

The Facts
Joseph and Kathleen Carter were married for nineteen years. During the marriage, Kathleen served as a homemaker and primary caregiver for their four adopted children, including one adult daughter with disabilities. Joseph worked as a self-employed chiropractor. When the marriage ended, the central dispute focused on three retirement accounts in Joseph’s name—accounts he claimed were funded entirely before the marriage.

Major Holdings
1. Nonmarital Retirement Accounts Are Protected
The Court of Appeals reversed the family court’s award of $40,000 to the wife from the husband’s retirement accounts, holding that once accounts are determined to be nonmarital in nature, the family court lacks jurisdiction to divide them.

The Key Principle: The spouse claiming an equitable interest in property bears the burden of proving it is marital in nature. Here, the wife testified about conversations regarding retirement planning but provided no documentary evidence showing contributions were made to the accounts during the marriage. The husband, however, presented certificates showing the accounts were fully funded before the marriage date.

Practice Tip: Document everything. If you’re claiming an asset is nonmarital, maintain clear records tracing the asset’s origin. If you’re claiming an asset is marital, gather evidence of contributions made during the marriage.

2. Asset Valuation Dates Must Be Fair and Equitable
While South Carolina law presumes marital assets are valued at the date of filing, the Court upheld the family court’s discretion to deviate from this rule when fairness requires it.

Mortgage Debt: The court valued the mortgage at the date of trial rather than filing, even though the husband had paid down $45,243 during the litigation. Why? The husband lived in the home rent-free while the wife had to secure separate housing. The court found this arrangement maintained the status quo from the marriage, where the wife’s homemaking contributions enabled the husband to earn income.

Marital Investment Account: The court valued this account at the date of filing because the husband violated a temporary order by withdrawing $40,000 without permission. Using the trial date would have allowed him to benefit from his own misconduct.

Credit Card Debt: The court valued a credit card at the date of trial because evidence showed the wife continued using it during litigation in the same manner as during the marriage, with the parties’ agreement.

Practice Tip: The date of valuation matters enormously. Be prepared to argue why a particular valuation date serves the interests of justice, considering factors like: Who had control of the asset? Who benefited from changes in value? Was there any misconduct?

3. Imputing Income to Self-Employed Spouses
The court upheld an imputed income of $80,000 to the husband despite his claimed income of approximately $61,892. The court considered:

Historical earnings averaging over $86,000 in prior years
His continued full-time work with no reduction in patient list
Personal expenses paid through his business
Suspicious timing of income reduction coinciding with the divorce filing
Receipt of COVID-19 assistance he initially denied receiving

Practice Tip: For self-employed spouses, look beyond W-2s. Examine business accounts, lifestyle expenses paid by the business, historical earning patterns, and any benefits received through the business.

4. Alimony Award of $2,700 Monthly Affirmed
The court found the $2,700 monthly alimony award appropriate after considering all statutory factors, including:

The 19-year marriage duration
Wife’s role as homemaker for the entire marriage
Her continued full-time caregiving responsibilities for a disabled adult child
Her 20+ year absence from the workforce
Husband’s professional degree and earning capacity
The couple’s upper-middle-class lifestyle during marriage

The court emphasized that the wife’s contributions to the marriage didn’t end when she left the marital home, as she continued providing full-time care for their disabled daughter.

5. Attorney’s Fees Properly Awarded
The court affirmed the award of attorney’s fees to the wife, finding she met her burden of showing:

Inability to pay her own fees due to 20+ years out of the workforce
Beneficial results obtained (periodic alimony and 50-50 split of marital assets)
Significant disparity in the parties’ financial conditions
Payment of fees would create financial strain for her but not for him

Practical Implications
For those with premarital retirement accounts: Maintain meticulous records showing the accounts’ values at the date of marriage and any contributions made before and during the marriage. The burden is on the other spouse to prove marital contributions, but clear documentation prevents disputes.

For homemakers: Your contributions to the marriage have value that extends beyond the date of separation. Courts recognize that caregiving responsibilities can prevent workforce participation and limit earning capacity.

For self-employed spouses: Expect scrutiny of your income claims, especially if income drops significantly around the time of divorce filing. Courts will look at historical earnings, business expenses, and lifestyle indicators.

For everyone: Comply with temporary orders. Violations can impact how assets are valued and may result in sanctions.

Conclusion
Carter v. Carter reinforces that South Carolina family courts have broad discretion to achieve equitable results in divorce cases, but that discretion has limits. Nonmarital property cannot be divided by the court, but almost everything else—valuation dates, alimony amounts, fee awards—depends on the specific facts and circumstances of each case.

If you’re facing divorce involving retirement accounts, complex assets, or alimony issues, it’s essential to work with an experienced family law attorney who can help you present the evidence needed to protect your interests.

This blog post is for informational purposes only and does not constitute legal advice. Every case is unique, and outcomes depend on specific facts and circumstances. For advice about your particular situation, please consult with a qualified family law attorney.

By Suzanne Klok|2025-11-12T17:01:53+00:00July 15th, 2024|Alimony, Equitable Distribution/Property Division, Family Law|Comments Off on Protecting Nonmarital Retirement Accounts in South Carolina Divorces

Share This Story, Choose Your Platform!

About the Author: Suzanne Klok

Related Posts

What to Wear to South Carolina Family Court Hearings

South Carolina Rule 21 Updates 2025: Temporary Hearings

Passport Provisions in SC Custody Orders: Complete Guide for Parents

Answering Discovery in SC Family Court: What You Must Know

Supreme Court Clarifies “Timely” Rule 59(e) Motions in Family Court

Key Takeaways from Carter v. Carter: Protecting Nonmarital Retirement Accounts in South Carolina Divorces
South Carolina Court of Appeals, June 20, 2024

The South Carolina Court of Appeals recently issued an important decision in Carter v. Carter that clarifies critical issues surrounding the division of retirement accounts, asset valuation dates, and alimony in divorce cases. This case offers valuable guidance for anyone navigating property division in a South Carolina divorce.

The Facts
Joseph and Kathleen Carter were married for nineteen years. During the marriage, Kathleen served as a homemaker and primary caregiver for their four adopted children, including one adult daughter with disabilities. Joseph worked as a self-employed chiropractor. When the marriage ended, the central dispute focused on three retirement accounts in Joseph’s name—accounts he claimed were funded entirely before the marriage.

Major Holdings
1. Nonmarital Retirement Accounts Are Protected
The Court of Appeals reversed the family court’s award of $40,000 to the wife from the husband’s retirement accounts, holding that once accounts are determined to be nonmarital in nature, the family court lacks jurisdiction to divide them.

The Key Principle: The spouse claiming an equitable interest in property bears the burden of proving it is marital in nature. Here, the wife testified about conversations regarding retirement planning but provided no documentary evidence showing contributions were made to the accounts during the marriage. The husband, however, presented certificates showing the accounts were fully funded before the marriage date.

Practice Tip: Document everything. If you’re claiming an asset is nonmarital, maintain clear records tracing the asset’s origin. If you’re claiming an asset is marital, gather evidence of contributions made during the marriage.

2. Asset Valuation Dates Must Be Fair and Equitable
While South Carolina law presumes marital assets are valued at the date of filing, the Court upheld the family court’s discretion to deviate from this rule when fairness requires it.

Mortgage Debt: The court valued the mortgage at the date of trial rather than filing, even though the husband had paid down $45,243 during the litigation. Why? The husband lived in the home rent-free while the wife had to secure separate housing. The court found this arrangement maintained the status quo from the marriage, where the wife’s homemaking contributions enabled the husband to earn income.

Marital Investment Account: The court valued this account at the date of filing because the husband violated a temporary order by withdrawing $40,000 without permission. Using the trial date would have allowed him to benefit from his own misconduct.

Credit Card Debt: The court valued a credit card at the date of trial because evidence showed the wife continued using it during litigation in the same manner as during the marriage, with the parties’ agreement.

Practice Tip: The date of valuation matters enormously. Be prepared to argue why a particular valuation date serves the interests of justice, considering factors like: Who had control of the asset? Who benefited from changes in value? Was there any misconduct?

3. Imputing Income to Self-Employed Spouses
The court upheld an imputed income of $80,000 to the husband despite his claimed income of approximately $61,892. The court considered:

Historical earnings averaging over $86,000 in prior years
His continued full-time work with no reduction in patient list
Personal expenses paid through his business
Suspicious timing of income reduction coinciding with the divorce filing
Receipt of COVID-19 assistance he initially denied receiving

Practice Tip: For self-employed spouses, look beyond W-2s. Examine business accounts, lifestyle expenses paid by the business, historical earning patterns, and any benefits received through the business.

4. Alimony Award of $2,700 Monthly Affirmed
The court found the $2,700 monthly alimony award appropriate after considering all statutory factors, including:

The 19-year marriage duration
Wife’s role as homemaker for the entire marriage
Her continued full-time caregiving responsibilities for a disabled adult child
Her 20+ year absence from the workforce
Husband’s professional degree and earning capacity
The couple’s upper-middle-class lifestyle during marriage

The court emphasized that the wife’s contributions to the marriage didn’t end when she left the marital home, as she continued providing full-time care for their disabled daughter.

5. Attorney’s Fees Properly Awarded
The court affirmed the award of attorney’s fees to the wife, finding she met her burden of showing:

Inability to pay her own fees due to 20+ years out of the workforce
Beneficial results obtained (periodic alimony and 50-50 split of marital assets)
Significant disparity in the parties’ financial conditions
Payment of fees would create financial strain for her but not for him

Practical Implications
For those with premarital retirement accounts: Maintain meticulous records showing the accounts’ values at the date of marriage and any contributions made before and during the marriage. The burden is on the other spouse to prove marital contributions, but clear documentation prevents disputes.

For homemakers: Your contributions to the marriage have value that extends beyond the date of separation. Courts recognize that caregiving responsibilities can prevent workforce participation and limit earning capacity.

For self-employed spouses: Expect scrutiny of your income claims, especially if income drops significantly around the time of divorce filing. Courts will look at historical earnings, business expenses, and lifestyle indicators.

For everyone: Comply with temporary orders. Violations can impact how assets are valued and may result in sanctions.

Conclusion
Carter v. Carter reinforces that South Carolina family courts have broad discretion to achieve equitable results in divorce cases, but that discretion has limits. Nonmarital property cannot be divided by the court, but almost everything else—valuation dates, alimony amounts, fee awards—depends on the specific facts and circumstances of each case.

If you’re facing divorce involving retirement accounts, complex assets, or alimony issues, it’s essential to work with an experienced family law attorney who can help you present the evidence needed to protect your interests.

This blog post is for informational purposes only and does not constitute legal advice. Every case is unique, and outcomes depend on specific facts and circumstances. For advice about your particular situation, please consult with a qualified family law attorney.