Court of Appeals reverses equitable distribution award on nonmarital retirement accounts but affirms $2,700 per month alimony for spouse with imputed annual income of $80,000

Posted Wednesday, July 24th, 2024 by Gregory Forman
Filed under Alimony/Spousal Support, Equitable Distribution/Property Division, Of Interest to Family Law Attorneys, South Carolina Appellate Decisions, South Carolina Specific

The June 20, 2024 Court of Appeals opinion in Carter v. Carter corrects an obvious family court error but fails to correct what I would think are additional inequities.

The Carter appeal stems from a divorce action. At trial, the family court awarded Wife $40,000 from Husband’s nonmarital retirement accounts. The court accepted Wife’s testimony of value for nearly all of the remaining marital property and debt. Wife was awarded monthly alimony of $2,700 and $10,000 in attorney’s fees. Husband filed a motion for reconsideration. The family court denied Husband’s motion and awarded Wife additional attorney’s fees of $1,200.  Husband appealed.

The $40,000 equitable distribution award at issue stemmed from Husband’s two premarital retirement plans that he rolled over into three retirement accounts. No contributions were made to the retirement accounts during the marriage. Wife’s sole claim for a portion of these accounts were alleged, “conversations with Husband during the marriage that led her to believe the accounts were preparing them both for retirement.” The Court of Appeals held that such discussions were insufficient to make the accounts marital and reversed the $40,000 award to Wife.

Husband also challenged the valuation date of three marital assets.  The family court valued the marital home as of the date of trial, rather than the date of filing, despite Husband having exclusive possession of the marital home and making the mortgage payment during the pendency of the action.  During the pendency, Husband reduced the balance of the first mortgage by $45,243.  The family court refused to credit Husband with this reduction in its equitable distribution award, finding he would have incurred housing expenses had he not remained in the marital home.

The Court of Appeals affirmed.  In addition to noting that Husband would have had housing expenses if he did not have possession of the marital home, it also found Wife was entitled to a homemaker contribution to the reduction in principal on the mortgage despite her not being the homemaker of the marital home during the pendency of the action. It specifically found her post-filing and full-time caretaking of the parties’ incapacitated adult daughter, “prohibited her from making financial contributions to the marital home, but nevertheless constituted a contribution to the marriage.”

Husband also challenged the valuation date for a marital investment account.  During the pendency of the action, Husband withdrew $40,000 from this account, using $5,000 to pay temporary attorney’s fees and the remainder to repair the marital home before listing it for sale. Husband made this withdrawal without Wife’s consent and in violation of the temporary order’s restraint against disposing, liquidating, or reducing the value of marital assets.  Because of Husband’s actions, the family court valued this account as of the date of filing, rather than the date of trial. The Court of Appeals affirmed.

The valuation of the marital home and the marital investment account strike me as inequitable.  Not only was Husband paying down principal while living in the marital home, he was also paying interest (and likely taxes and insurance).  He was not seeking credit for these payments.  Further, his use of the marital investment account to repair the home increased the equity in that home.  The family court essentially debts Husband 100% of these repair costs but gives Wife credit for the increased home value.

Husband finally challenged the valuation date of an IHG credit card.  That card had a zero balance on the date of filing but Wife used the card during the pendency of the case for her own expenses, including medical bills and gas.  At trial there was a $6,120 balance and Husband was ordered to pay all of it.  The Court of Appeals affirmed, finding that Husband had traditionally paid $500 per month on this credit card and had stopped doing so after the action was filed but before the temporary hearing.

One would think that the temporary order would be definitive on Husband’s temporary support obligation and debts Wife incurred after that date would not be marital. However, the Court of Appeals held that because Wife’s use of the credit card was in line with its traditional use, the debt was marital in nature.  It affirmed the requirement that Husband be responsible for 100% of this debt.

The Court of Appeals further affirmed the valuations of Wife’s vehicle and jewelry.  Here, it simply appears Wife provided the family court better evidence of these valuations at trial than Husband did.

The Court of Appeals further affirmed an award of $2,700 per month in permanent periodic alimony to Wife.  Husband challenged four factual finding that supported this award: (1) his being imputed $80,000 in annual income; (2) a finding that he had the ability to pay alimony of $2,700 per month; (3) a find that Wife needed alimony of $2,700 per month; and (4) a finding that the parties lived an upper middle-class lifestyle. While the opinion does not list Husband’s age, he presented evidence at trial that his chiropractic business was slowing down due to his age.  There were fluctuations in his income during the years prior to and during the litigation but it appears his financial disclosure was inaccurate.  An $80,000 per year earning capacity is not out of line with the facts presented.

However, the finding that Husband had the ability to pay $2,700 per month in alimony has little support in the opinion. The opinion notes Wife was disabled and had income of $874 per month plus $670 per month as the guardian for their incapacitated daughter.  However, the alimony award is a bit over 40% of Husband’s alleged earning capacity and that earning capacity is gross income while he pays alimony from net income. The opinion does not discuss marital fault and neither party alleged fault in the divorce.  An alimony award of over 40% of a party’s gross income is shocking.

Given Wife’s mostly successful results at trial and Husband’s greater ability to pay fees, the Court of Appeals affirmed the $11,200 fee awards.

Husband has already sought rehearing, and this would appear to be a good case for certiorari. The failure to give Husband credit for the reduction in principal on the home mortgage, the requirement that he cover Wife’s post-filing credit card debt when he already had a temporary support obligation, and the alimony award all seem like possible error.

One thought on Court of Appeals reverses equitable distribution award on nonmarital retirement accounts but affirms $2,700 per month alimony for spouse with imputed annual income of $80,000

  1. Agree that the court rulings appears to be grossly prejudiced in favor of the wife and this could possibly be due to her claiming to be the primary care giver of the couples’ handicapped child. That situation might better to be served by requiring a trust fund be set up to guarantee monthly payment toward current caregiving and to include lifelong care, should the wife (mother) herself become incapacitated or deceased.

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