Is a Spouse’s Business considered Marital Property? What is transmutation?

This issue is discussed in a recent South Carolina Supreme Court case, Pittman v. Pittman. In this case, the South Carolina Supreme Court addressed the issue of whether one spouse’s land surveying business would be considered marital property subject to equitable division.  The final decision was that the husband’s land surveying business had been transmuted into a marital asset because “the evidence preponderates in support of a finding that the parties intended the land surveying business to be the common property of the marriage”.  Additionally, the husband argued that, even if the business was transmuted into a marital asset, he would still be entitled to receive a “special equity” in the value of the business as of the date of the parties’ marriage.  Justice Kittredge disagreed, stating “(w)hen property is determined to have been transmuted, the entire property, not just a portion of the property, is included in the parties’ marital property which is thereafter apportioned by the family court using the criteria set forth in [the equitable apportionment statute]. … Indeed, once the Business was determined to have been transmuted, the full value of the Business was appropriately included in the marital estate”. [Note: the basis for the modification is that the family court judge had considered the wife’s premarital contributions in the operation of this business as another “transmutation factor”, and the opinion stated that “(T)o be clear, the family court committed an error of law in relying on Wife’s premarital contributions to the the Business in support of its transmutation finding [defining the term “marital property” as “all real and personal property which has been acquired by the parties during the marriage“]”.  Read the entire decision here.

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