What is Transmutation?

Typically property that is owned by one party prior to the marriage, or gifted to or inherited by one party from a third-party during the marriage, remains the separate property of that spouse and is not subject to equitable distribution. However South Carolina has a doctrine, “transmutation,” in which such property can lose its non-marital character and become marital property, subject to equitable distribution.

“Property that is nonmarital when acquired may be transmuted into marital property if it becomes so commingled with marital property that it is no longer traceable, is titled jointly, or is used by the parties in support of the marriage or in some other way that establishes the parties’ intent to make it marital property.” Wilburn v. Wilburn, 403 S.C. 372, 384, 743 S.E.2d 734, 740 (2013).

“Transmutation is a matter of intent to be gleaned from the facts of each case…The spouse claiming transmutation must produce objective evidence showing that, during the marriage, the parties themselves regarded the property as the common property of the marriage.” Jenkins v. Jenkins, 345 S.C. 88, 98, 545 S.E.2d 531, 537 (Ct.App.2001). Evidence of intent to transmute nonmarital property may include using the property exclusively for marital purposes or using marital funds to build equity in the property. Johnson v. Johnson, 296 S.C. 289, 295, 372 S.E.2d 107, 111 (Ct.App.1988). However, “[t]he mere use of separate property to support the marriage, without some additional evidence of intent to treat it as property of the marriage, is not sufficient to establish transmutation.” Id. at 295-96, 372 S.E.2d at 111.

Even when property is not transmuted, the non-owning spouse can still obtain a “special equity” interest in that property when an “increase in value in nonmarital property … resulted directly or indirectly from efforts of the other spouse during marriage.” S.C. Code § 20-3-630(A)(5).

South Carolina case law is inconsistent on when property has been transmuted. Some cases find transmutation because the mortgage was paid during the marriage from funds the property owner earned during the marriage. Other cases do not. Most cases speak of transmutation being based on the intent of the “parties” (failing to acknowledge there will never be transmutation litigation in which the non-owning spouse claims there was no intent to transmute. A few cases note–I believe correctly–that it is the owner’s intent that should determine whether property is transmuted.

Roy T. Stuckey’s Marital Litigation in South Carolina is the preeminent work on South Carolina Family Law. Even he has difficulties finding consistency in appellate court decisions on transmutation and takes issue with numerous reported decisions. While there are obvious cases of transmutation–the parties refinance a pre-marital home to put the deed and mortgage in both spouse’s names and both make payments on the mortgage; the parties co-mingle marital and non-marital accounts and both make deposits into and withdrawals from the new joint account–most contested transmutation cases are not so clear cut. Further, while the family court could develop a habit of straying from 50-50 division of transmuted assets, they are not yet doing so.

Many folks seeking marital dissolution with the expectation that their pre-marital property will not be a factor in property division are shocked to discover their spouse making a transmutation claim. There are steps one can take to minimize the chance of a transmutation claim–however these steps need to begin when the marriage begins or when the property is acquired. By the times folks contact a divorce lawyer it is too late. At that point there is little certainty to be provided on whether a court will find property to be transmuted.