Pre-Marital Business Becomes Martial Property

Generally, marital property is property acquired
by either spouse during the marriage. On the other hand, premarital property, owned by a spouse before the marriage, is considered separate property and isn’t split up during a divorce.

Sometimes the lines get blurred, especially if you don’t keep your separate property truly separate, as a South Carolina case demonstrates.

In that case, a husband formed a business before marrying his wife. Several years before they got married, the wife, who was a family friend at the time, loaned him money for the company and left college to

work for the company.
After filing for the divorce, the wife sought to share

in assets related to the business. According to the wife, she assisted her husband with the company while they were married, working without pay, and her husband held her out as an equal partner. She said she also obtained loans for the business and invested in it.

A divorce judge said this was enough to “transmute” the business to marital property. An appeals court agreed, upholding the judgment. Now, the business will be included in the marital estate and the wife will be entitled to her share.

(This article was published as part of the Legal Matters Family Law Summer 2019 newsletter)

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