When a couple goes through a divorce in South Carolina, dividing marital assets can become especially complicated if one or both spouses own a business.
Whether it’s a family-owned business, a professional practice, or a closely held company, determining how to equitably divide business interests is a critical issue.
South Carolina follows the principle of equitable distribution, which means assets are divided fairly—but not necessarily equally.
This article explains how the court handles divorce involving business ownership and what you need to know to protect your financial interests.
Understanding Equitable Distribution in South Carolina
Under South Carolina law, marital property is subject to equitable distribution upon divorce.
According to S.C. Code Ann. § 20-3-620, marital property includes all assets acquired during the marriage, with some exceptions such as gifts, inheritances, and property acquired before the marriage.
A business or business interest can qualify as marital property, in whole or in part, depending on how and when it was acquired and how it was managed during the marriage.
Courts consider multiple factors when determining an equitable division, including:
- The duration of the marriage
- Each spouse’s contributions to the acquisition, preservation, or appreciation of the marital estate
- The value of the marital and non-marital property
- The economic circumstances of each spouse
- Any existing support obligations
This makes the division of business assets in a South Carolina divorce a fact-intensive process that often requires expert testimony and financial records.
When Is a Business Considered Marital Property?
A business is typically considered marital property if it was:
- Started or acquired during the marriage
- Appreciated in value during the marriage due to the efforts of either spouse
- Commingled with marital funds or assets
If the business was owned prior to the marriage but grew substantially due to joint efforts or marital assets, a portion of its value may still be deemed marital and subject to equitable distribution.
For example, if a spouse owned a small landscaping company before marriage but the other spouse contributed labor, capital, or management that led to growth, that increase in value may be divisible.
Business Valuation in Divorce
One of the most critical steps in dividing business interests during a divorce is accurately valuing the business. The court may rely on one or more methods of valuation, including:
- Income approach: Based on the present value of expected future earnings
- Market approach: Based on sales of comparable businesses
- Asset-based approach: Based on the value of assets minus liabilities
A qualified business appraiser is often needed to provide a reliable valuation. In some cases, each party may hire their own expert, which can lead to differing valuations that the court must reconcile.
Options for Dividing a Business in Divorce
There are several ways that courts or parties can resolve business division in a South Carolina divorce involving a business:
- Buyout: One spouse buys out the other’s interest, either with cash or through an offset in other assets.
- Co-ownership: In rare cases, ex-spouses may continue to co-own and operate the business together, though this requires a strong working relationship.
- Sale and split of proceeds: The business is sold, and the proceeds are divided equitably.
The court typically avoids forcing a business sale if other equitable alternatives exist, especially if it would harm the business’s value or continuity.
Protecting a Business Before and During Divorce
Spouses can take proactive steps to protect a business from division in the event of divorce. These include:
- Prenuptial or postnuptial agreements that specifically address business ownership
- Maintaining clear separation between personal and business finances
- Limiting the non-owner spouse’s involvement in the business
- Keeping thorough and accurate business records
During the divorce process, transparency is essential. Attempting to hide or undervalue business assets can lead to legal consequences and damage to credibility in court.
Tax Implications and Other Considerations
Transferring business interests during a divorce can have significant tax implications, especially if the transfer results in gains or losses. It’s important to consult a financial advisor or tax professional to evaluate these issues during property division.
Additionally, if the business has third-party shareholders or partners, operating agreements and corporate bylaws may restrict the transfer of ownership shares, which can influence how the court divides the interest.
Frequently Asked Questions (FAQs)
Below are several questions frequently asked about how equitable division affects businesses in South Carolina. You can find other commonly asked questions and answers about South Carolina divorce here.
Is my business considered marital property in South Carolina?
It depends. If the business was started or grew during the marriage, it may be considered partially or fully marital property.
Can I keep my business after a divorce?
Yes, often through a buyout or an offset using other marital assets. Courts generally try to avoid business sales if there’s a viable alternative.
How is the value of a business determined in a divorce?
A professional appraiser typically uses income, market, or asset-based approaches to determine fair market value.
What if my spouse had nothing to do with the business?
Even if your spouse was not directly involved, they may still be entitled to a share if marital funds or joint efforts contributed to the business’s growth.
Need help with your South Carolina divorce?
Dividing a business during divorce can be one of the most complex aspects of South Carolina equitable distribution law.
A fair outcome depends on accurate business valuation, understanding the distinction between marital and non-marital interests, and careful negotiation or litigation. Whether you’re a business owner or the spouse of one, having knowledgeable legal and financial guidance is key to protecting your future.
If you are going through a divorce and a business is involved, don’t leave your financial future to chance.
Speak with a South Carolina family law attorney who understands the complexities of business valuation and equitable division in divorce.
Protect what you’ve built—contact Seaton & Duncan today for guidance tailored to your situation.
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