A parent leaves you money, a family member leaves you a house, or you receive an investment account that has been in your family for decades. Then your marriage ends. South Carolina Family Court divides marital property through equitable apportionment. Equitable does not automatically mean equal. Before a court can divide an asset, however, it must determine whether the asset is marital or nonmarital, and that classification is often the central issue in inheritance disputes. So is an inheritance divided in a South Carolina divorce, and what can make it marital property?
Quick Answer: Usually, no. Inherited property is generally nonmarital property in South Carolina, even if it is received during the marriage, so it ordinarily belongs to the spouse who inherited it. But the answer can change if inherited property is mixed with marital assets and cannot be traced, is jointly titled, or is treated in a way that shows an intent to make it part of the marriage, which is called transmutation.
Table of Contents
- Is an Inheritance Divided in a South Carolina Divorce?
- Can an Inheritance Become Marital Property?
- How Is an Inheritance Treated in Different Situations?
- Is Using Income from an Inheritance Transmutation?
- What Happens if an Inherited Asset Appreciates in Value?
- How Can Keeping Records Protect an Inheritance?
- Can an Inheritance Affect the Divorce?
- What Impact Does an Expected Inheritance Have on a Divorce?
- What Should You Do If Inherited Property Is at Issue in Your Divorce?
Is an Inheritance Divided in a South Carolina Divorce?
Property acquired by inheritance, devise, or bequest is generally nonmarital property in South Carolina. This means an inheritance one spouse receives ordinarily belongs to that spouse and is not subject to equitable apportionment in the divorce.
The rule can apply to inherited money, real estate, securities, family-business interests, and personal property. It also applies when the inheritance is received during the marriage. An asset that came into the marriage after the wedding does not, by itself, become marital.
The protection is not absolute. Separate inherited property may become marital through transmutation. Transmutation occurs when the parties’ conduct objectively shows an intent to treat otherwise separate property as the marriage’s common property. South Carolina is not a community property state, so property is not automatically split in half, as we explain in our article on whether South Carolina is a community property state.
Can an Inheritance Become Marital Property?
One frequent issue is commingling. This may occur when inherited money is deposited into a joint account and mixed with marital earnings, household funds, or money the other spouse contributed.
Commingling alone does not automatically make inherited funds marital property. If the funds remain identifiable and traceable, the inheriting spouse may still be able to establish their nonmarital character. The analysis becomes more difficult, however, when inherited money is repeatedly mixed with marital funds, transferred among accounts, or used in a manner consistent with shared ownership.
For example, suppose one spouse inherits $100,000 and deposits it into a joint checking account. The couple then uses that account to pay the mortgage, buy furniture, take vacations, and cover regular expenses. By the time divorce proceedings begin, it may be difficult to identify what remains of the original inheritance. A court may find that the funds became untraceable or that the parties’ conduct showed an intent to treat them as marital property.
Using inherited funds to purchase or improve jointly owned property can create similar issues. If inherited money is used for a down payment on a home titled in both spouses’ names, that may support an argument that the funds were intended to be part of the marital estate. Likewise, substantial inherited funds used for improvements to jointly owned property may be relevant to whether the asset was treated as shared.
Changing title can also matter. An inherited house titled only in one spouse’s name may begin as nonmarital property. If that spouse later adds the other spouse to the deed, the court may view the title change as evidence of an intent to make the home marital property.
No single fact controls every case. Family Court considers the asset’s source, how it was titled, whether it can be traced, how it was used, and whether the evidence shows the parties treated it as common property of the marriage.
How Is an Inheritance Treated in Different Situations?
The outcome depends on the facts of each case, but the following table summarizes how South Carolina courts generally approach common situations:
| Situation | How It Is Generally Treated |
|---|---|
| Inheritance kept in an account or title in only the inheriting spouse’s name | Generally remains nonmarital property |
| Inherited money deposited into a joint account but still traceable | May remain nonmarital if it can be identified and traced |
| Inherited money mixed with marital funds and used for family expenses until it cannot be traced | May become marital property |
| Inherited money used for a down payment on a home titled in both spouses’ names | May support a finding that the funds became marital |
| Other spouse added to the deed of an inherited house | May be evidence of an intent to make the house marital |
| Rent, dividends, or other income from an inherited asset used for household expenses | Does not, by itself, make the underlying asset marital |
| Passive growth in value from market forces | Generally remains nonmarital |
| Growth in value resulting from the other spouse’s efforts | That portion of the increase may be marital |
| Expected inheritance from a living relative | Generally an expectation, not presently owned property |
Is Using Income from an Inheritance Transmutation?
It is important to distinguish the inherited asset from income it produces. For example, inherited rental property may generate rent, or inherited stock may generate dividends. Using that rent or dividend income for household expenses does not automatically transform the underlying inherited property into marital property.
Income from nonmarital property can still matter in determining what income or funds are available to the spouses and whether particular proceeds have become marital property. But using that income for household expenses alone does not establish that the inherited asset itself became marital.
What Happens if an Inherited Asset Appreciates in Value?
An inherited asset may increase in value during the marriage. Whether that growth remains nonmarital depends partly on why it occurred.
South Carolina law generally treats an increase in the value of nonmarital property as nonmarital. The exception is the portion of the increase that resulted directly or indirectly from the other spouse’s efforts during the marriage.
Passive appreciation is growth caused by market forces rather than either spouse’s work. A brokerage account may increase because the market rises. Land may become more valuable because of nearby development or increased demand. When the inherited asset remains separate, passive appreciation generally remains nonmarital.
Consider an inherited rental property. If the non-owning spouse contributes substantial work to repairs, management, or improvements, the value increase attributable to that spouse’s efforts may fall within the statutory exception. The facts may also support a separate argument that the parties treated the property as marital through their conduct.
Marital funds, joint management, joint title, and joint use do not automatically make the full value of an inherited asset marital. Instead, those facts may be relevant to whether the property transmuted into marital property or whether the other spouse has an equitable interest in an increase in its value attributable to that spouse’s contributions.
If a court finds transmutation, it may include the asset in the marital estate and divide it under South Carolina’s equitable-apportionment factors. Even without transmutation, the other spouse may have an equitable interest in appreciation attributable to that spouse’s efforts during the marriage.
How Can Keeping Records Protect an Inheritance?
A spouse claiming that an inheritance is nonmarital should be prepared to establish its source and trace it over time. A clear paper trail can make a substantial difference when the other spouse claims the property was shared or cannot be identified as inherited property.
Useful records may include:
- The will, trust document, or beneficiary designation;
- Probate records;
- Account statements showing inherited funds entering an account;
- Closing documents for inherited real estate;
- Deeds and title records;
- Tax records;
- Receipts and invoices for improvements; and
- Statements showing transfers between accounts.
Keeping inherited money in an account titled only in the inheriting spouse’s name is generally easier to defend than placing it in a joint account. Separate title does not end the analysis, because the court may still consider how the money was used. But separate title, limited commingling, and complete documentation provide stronger evidence that the inheritance was intended to remain separate.
Testimony can be sufficient when it is credible and not contradicted. In a contested divorce, however, financial documents and consistent records usually make it much easier to prove the source, movement, and treatment of inherited property.
Can an Inheritance Affect the Divorce?
Even when an inheritance is not divided, it may still matter in other parts of the case. South Carolina law requires the Family Court to consider each spouse’s nonmarital property when equitably apportioning marital property. A substantial separate estate may therefore affect the percentage of the marital estate awarded to each spouse.
Nonmarital property may also matter in alimony determinations. The court considers multiple factors, including the parties’ incomes, earning capacity, expenses, needs, marital and nonmarital property, health, and standard of living during the marriage.
That does not mean a spouse loses an inheritance simply because it exists. It means the inheritance may be part of the larger financial picture the Family Court considers when deciding issues involving marital-property apportionment or support.
What Impact Does an Expected Inheritance Have on a Divorce?
An expected inheritance differs from an inheritance already received. A person who expects to inherit from a living parent or relative generally has an expectation, not property they currently own.
Trust interests and distribution rights may require a more specific analysis. The nature of the beneficiary’s interest, the trust’s terms, whether distributions are mandatory or discretionary, and the timing of distributions can all matter.
Timing also matters in identifying the marital estate. South Carolina generally defines marital property as property acquired during the marriage and owned when marital litigation begins, subject to statutory exclusions. The statute separately excludes property acquired after certain later events, including the entry of a pendente lite order in a divorce or separate-maintenance action. Property acquired by inheritance is independently excluded from marital property when one spouse receives it.
What Should You Do If Inherited Property Is at Issue in Your Divorce?
Do not move money, change titles, or make major transfers simply because a divorce appears likely. Those actions can create additional disputes, and the court may closely examine them. Our articles on what happens when a spouse wastes marital assets before divorce and whether a spouse can empty a bank account before or during a divorce explain how courts address transfers made around the time of a divorce.
Instead, gather records showing where the asset came from, how it was titled, whether it was transferred or commingled, and how it was used throughout the marriage.
If inherited funds were used for a marital purpose, do not assume the entire inheritance is automatically marital. Tracing may still establish that some portion remained separate. Likewise, a spouse should not assume that an inherited asset is beyond dispute merely because it was inherited. The facts may support a transmutation claim.
Inheritance disputes are often document-heavy and highly fact-specific. When an inheritance is part of a divorce, the first question is not simply how much it is worth. The first question is whether the evidence shows that it remained the inheriting spouse’s separate property or became part of the marital estate.
The attorneys at Futeral & Nelson have represented clients in divorce cases in Charleston, Mount Pleasant, North Charleston, Summerville, and throughout the Lowcountry since 2003. If you have questions about protecting an inheritance in your divorce, contact our Charleston divorce lawyers at 843-284-5500 to discuss your situation and your options.
