Any couple will find divorce difficult, but the complexities multiply exponentially in cases involving high net worth couples.
When substantial assets, property holdings, and business interests become part of the equation, the skill and sophistication of an experienced Myrtle Beach divorce attorney can protect your rights, obtain a fair allocation of marital assets, and meet your other priorities.
South Carolina, a state that follows equitable distribution rules in divorce cases, makes these challenges especially acute.
Introduction to South Carolina Divorce Laws
Let's begin by reviewing the basics of South Carolina divorce law.
Every state has its own rules and regulations that courts and parties must follow in divorce cases. Here's an overview of the foundational legal considerations in South Carolina divorces.
Fault and No-Fault Divorce
South Carolina law recognizes both fault and no-fault divorce. Fault divorces are permissible in the four instances of adultery, alcohol or substance abuse, physical cruelty/domestic violence, and desertion. A no-fault divorce is also allowable under South Carolina law, but to obtain it the couple must first live separately for a year without cohabitation.
Equitable Distribution Rules for Division of the Marital Estate
Unlike community property states that typically require a 50/50 split of assets that a couple acquired during the marriage (marital assets), South Carolina follows equitable distribution rules. This means that family courts divide the marital assets based on what they consider fair and equitable, which is not always a 50/50 split.
They take into consideration factors such as the length of the marriage, each party's earning potential, contributions to the marriage (including the care and education of children), and marital misconduct. This careful and contextualized consideration of circumstances can lead to various asset distribution outcomes, especially in high net worth divorces.
Alimony and Child Support
The availability of alimony in South Carolina depends on numerous factors, including the length of the marriage, the standard of living the couple established during the marriage, and each party's financial resources and needs.
In terms of child support, South Carolina uses the income shares model, based on the principle that a child (or children) should receive the same proportion of parental income as if the parents still live together. These considerations can significantly alter the financial landscape of a high net worth divorce.
Prenuptial and Postnuptial Agreements in South Carolina
Prenuptial and postnuptial agreements, which are contracts that couples enter into before and after marriage respectively, can significantly alter the character and distribution of assets in a high net worth divorce. These agreements can set the terms of property division, spousal support, and other financial matters.
South Carolina law generally views prenuptial and postnuptial agreements as enforceable, subject to certain conditions and considerations. They are by no means ironclad, and divorcing couples can challenge or even invalidate them under certain circumstances.
Enforceability of Prenuptial and Postnuptial Agreements in South Carolina
For a prenuptial or postnuptial agreement to be enforceable in South Carolina, it must meet certain legal criteria. The document, first and foremost, has to be in writing, and both parties must sign it, having entered into the agreement voluntarily, free of duress or coercion. The agreement must also be substantively fair to both parties so that it doesn't later function as a tool of financial exploitation.
The enforceability of prenuptial and postnuptial agreements may also hinge on the full and fair disclosure of assets. This means that each party must have a comprehensive understanding of the other's financial situation before entering into the agreement. A lack of full disclosure or discovery of hidden assets could provide grounds for invalidating the agreement.
Courts in South Carolina have the authority to invalidate an agreement they deem unreasonable or one that a party entered into under fraud, duress, mistake, misrepresentation, or non-disclosure.
While these agreements can provide some certainty in the face of a potential divorce, there is no guarantee they will hold up in every circumstance, and the courts will scrutinize them in high net worth cases.
Challenges of High Net Worth Divorces in South Carolina
High net worth divorces bring unique challenges that require a nuanced understanding of the law and sophisticated financial acumen. These complexities typically arise due to larger, more diverse asset pools and the associated legal, tax, and business implications.
Here are some specific challenges that often feature in high-net-worth divorces in South Carolina.
Identification and Valuation of Marital and Non-Marital Assets
One of the key challenges in high net worth divorces is the identification, location, and valuation of marital and non-marital assets. Marital assets include property and assets a couple acquired during the marriage, regardless of whose name is on the title. Non-marital assets, on the other hand, such as inheritances or gifts an individual spouse received, remain separate and are usually not subject to division in a divorce.
The line between marital and non-marital assets can blur, however, especially in long-term marriages or when these two types of assets intermingle. Professionals, such as forensic accountants, may have to trace assets, identify hidden income or property, and provide accurate asset and business valuations.
Enforceability of Prenuptial or Postnuptial Agreement(s)
The enforceability of prenuptial or postnuptial agreements can significantly alter the division of assets in a high net worth divorce. Any conflicts or disputes surrounding these agreements can complicate divorce proceedings and may require additional litigation to resolve.
Business Ownership and Control Implications
When a spouse owns a business or has a substantial interest in a company, that entity can become a significant point of contention in a high-net-worth divorce. You need a lawyer to determine the value of the business, its future earning capacity, and its classification as marital or non-marital property.
The question of who maintains control over the business post-divorce can present contentious negotiation and strategic planning considerations, particularly if a change of control has an impact on the business's value or obligations to creditors or third parties.
Shareholder agreements or the terms limited liability company or limited liability partnership may impose significant limitations on the transferability of business interests or the ability of a transferee to participate in management decisions.
In most high-net-worth divorces in South Carolina, the parties need commercially sophisticated attorneys and advisors to evaluate the implications of apportioning business assets.
Tax Implications
High net worth divorces often involve substantial tax implications. The division of substantial marital estates, the transfer or sale of properties, and alimony payments can all have significant tax consequences. The forced sale of a shared business or property, for instance, can trigger capital gains tax, which can deplete the resources the couple gained from the sale.
Depending on their structure, the distribution of retirement funds, investment accounts, or trust property, might also incur early withdrawal penalties and associated taxes.
The assignment of alimony, furthermore, can have significant tax implications for both the payer and recipient, depending on the specifics of the arrangement.
For divorces that concluded after 2019, for example, the IRS no longer treats alimony payments as deductible for the payor or taxable for the payee, which can have a significant bearing on each party's tax bracket in high net worth cases.
A firm grasp of these potential tax issues can drastically alter the financial outcomes for both parties in a divorce case.
Alimony and Child Support
Alimony and child support considerations are also significant in high-net-worth divorces. The determination of alimony, in particular, can be complex due to the variety of income sources the wealthier spouse may have, including salary, bonuses, dividends from investments, and profits from businesses they own. The courts may need to consider all these factors when deciding on an appropriate level of spousal support.
Child support calculations typically involve a straightforward formula based on the parents' incomes. In high net worth families, however, the courts may also consider the children's accustomed standard of living and the cost of maintaining that lifestyle, making these cases far more complex.
Child Custody
While child custody may not directly correlate with a couple's net worth, the stakes are often higher in these cases, given the financial resources available for potential custody battles. Issues of parenting time, decision-making authority, and child support can become contentious and influence other aspects of the divorce proceedings, including asset division.
High net worth parents, for instance, often have the means to provide additional opportunities for their children, such as private schooling, extensive travel, or extracurricular activities.
These factors can complicate custody decisions, as courts aim to maintain the stability of the children's lifestyles.
If parents live in different geographical locations due to work or other commitments, this can also have a bearing on decisions regarding shared custody and visitation rights.
FAQs About High Net Worth Divorces in South Carolina
As we steer towards a conclusion, it's imperative to note that high-net-worth divorces can prompt numerous questions from couples seeking to navigate the complex landscape of divorce law in South Carolina. This section presents a compilation of some FAQs.
What Happens to Inherited Property in a High Net Worth Divorce?
South Carolina law generally considers inherited property to be non-marital. There is, therefore, no division of such property between the spouses in a divorce. If, however, the property intermingled with marital assets (for instance, in a joint account or if both spouses made use of the property), the law may consider it a marital asset.
If inherited property has increased in value during the marriage, moreover, the law may consider that increase in value as marital property. This is especially the case if the non-inheriting spouse's efforts contributed to the increase in value, such as through maintenance and improvements.
While a divorce may not divide the inherited property itself, a South Carolina high net worth divorce might subject any increase in its value to equitable distribution.
Can a Prenuptial Agreement Protect My Business in a Divorce?
A prenuptial agreement, in general, can stipulate that your business remains your separate property in the event of divorce. Its enforceability, however, largely depends on whether it meets the prescribed legal considerations, such as full disclosure of assets prior to signing and fairness to both parties.
How Does the Court Determine Child Custody in a High Net Worth Divorce?
A court makes child custody decisions based on a child's best interests. The court considers several factors, such as the emotional bonds between parent and child, the child's adjustment to their school and community, the mental and physical health of all parties, and the ability of each parent to meet the child's needs.
Can a Prenuptial or Postnuptial Agreement Decide Child Custody and Support?
No. Courts in South Carolina do not recognize the authority of a prenuptial agreement to decide issues relating to custody, support, or the best interests of minor children. These are issues exclusively within the jurisdiction of the court. A judge may, of course, consider the parents' wishes in deciding those issues, but an agreement does not bind the court's decision.
How Do the Courts Divide Retirement Accounts in a Divorce?
The law often considers retirement accounts as marital property in South Carolina, regardless of whose name is on the account. The court may split the account equitably between the parties, considering factors such as the length of the marriage and each spouse's contribution to the account.
Contact an Experienced South Carolina High Net Worth Divorce Lawyer Today
The complexities of high net worth divorces in South Carolina mean that each party requires representation by experienced, sophisticated legal counsel. If your divorce may involve significant assets, do not hesitate to contact a skilled South Carolina high net worth divorce attorney today for a consultation.
