South Carolina Laws for Dividing Annuities in a Divorce

by Heather Frances J.D. Google
Spouses may incur additional fees when splitting an annuity.

Spouses may incur additional fees when splitting an annuity.

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South Carolina spouses, like spouses in other states, must split their assets, including their annuities, when they divorce. Dividing assets is sometimes difficult. Spouses can reach an agreement on their own as to how to divide their marital property, or they can let the court decide for them. For example, they might split their annuities, or one spouse might get the annuities while the other spouse gets to keep a piece of real estate or other asset in exchange.

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Divorce Includes Equitable Division

During a South Carolina divorce, the court splits marital assets equitably, but not necessarily equally, between the spouses. An equitable split incorporates many factors that may encourage the court to split the assets unequally in a particular case. These factors, as described in state statutes, can include the duration of the marriage, the support either spouse pays to a former spouse or child of another relationship, marital misconduct, the overall economic circumstances of each spouse and the spouses' child custody arrangements. The court can also consider any additional factors it deems necessary for an equitable and just division.

Marital Assets Can Include Annuities

The divorce court splits marital assets -- those assets acquired during the marriage -- regardless of whose name is on the title. For example, an annuity acquired during the marriage is typically considered a marital asset even if it is in only one spouse's name, so both spouses have rights to it during the divorce. Annuities and other property acquired before marriage, however, are considered non-marital property, which is not subject to division during a divorce, as is property acquired by gift or inheritance.

Non-Marital Property Can Become Marital Property

Non-marital property, including an annuity, can lose special status and become marital property eligible for division by the court in a divorce. This can happen when spouses commingle the non-marital asset with marital assets. For example, payments from an annuity into a joint bank account can lose their special non-marital status. Non-marital assets can also become marital assets if both spouses use the property during the marriage, the asset is put into both spouses' names, or the asset is used by both spouses in such a way that it's evident that the spouses meant for joint ownership of the asset.

Costs of Splitting Annuities

Unlike other types of marital property, annuities present unique difficulties when it comes to dividing them. For example, when spouses split an annuity, they may have to pay a surrender charge as well as a penalty fee if the annuity is part of a retirement account. These fees can run into thousands of dollars, so spouses may wish to consider the additional fees before agreeing to a property split. Depending on the types of assets the spouses own, they may be better off letting one spouse keep the annuity while the other takes other similarly valued assets.