1. Is there any clear advantage/disadvantage to me paying off shared debt over the next few months, be it student loan, credit card, etc? I want to pay it down as quickly as possible but wasn’t sure if that could somehow work against me in an assets/liabilities kind of way.
2. Should I refrain from purchasing anything that could be considered a “luxury” until we file? (e.g. TV, computer, etc.)

South Carolina Code §20-3-630(A) defines the term “marital property” as, “all real and personal property which has been acquired by the parties during the marriage and which is owned as of the date of filing or commencement of marital litigation…regardless of how legal title is held.”

In South Carolina, anything that is considered marital property that was purchased during the marriage and owned or owed as of the date of filing of your case can be divided by the Family Court.  So, if you pay off a bunch of debt prior to filing, you would be removing debts that could be shared between the two of you by the Court because they would no longer be owed as of the date of filing the marital litigation.  At the same time, even if you and your spouse have been separated for a while, anything you purchase prior to filing for divorce would be divisible by the court as marital property because it was purchased during the marriage, prior to the filing of marital litigation, and it doesn’t matter whose name is listed on the title of the property.

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The Background

Imagine being separated from your spouse for several years. When you were together, you didn’t really have any property or debts. You didn’t have a lot of money in general. You left because you were tired of being abused and so you could protect your children. Since you separated, it has been a nightmare to try to collect child support. Your spouse rarely pays, and when he/she does, it isn’t on time. Since money is tight and divorce is expensive, you decided not to proceed with a divorce until you really needed to.

Then, you hit the lottery. Literally. You are the new overnight millionaire. You and your children’s lives just got a whole lot better. And now, because of the notoriety and because of the money, you’re not just hearing from those long lost family members who would like a “loan” but your old flame just wandered back into the picture, and sent you a message, “you’ll be hearing from my lawyer.”

What?!? Is he/she entitled to some of my lottery winnings? You may have heard about this situation recently on the morning shows. This is basically the facts of a real life case out in Utah where Holly Lahti won one-half of the Mega Million $380 million jackpot. She cashed in and took the lump sum payment of $80.6 million. There is some question about what percentage, if any, of the payout that her estranged husband would be entitled to since she never filed for divorce or legal separation. Let’s say that rather than being in Utah that this was going on in South Carolina. What would happen?

South Carolina Equitable Division

SC Code §20-3-630 defines marital property as “all real and personal property which has been acquired by the parties during the marriage and which is owned as of the date of filing or commencement of marital litigation … regardless of how legal title is held.”  So, since no divorce action or separate support and maintenance action had been filed by either party prior to Ms. Lahti winning the lottery, the lottery winnings would be considered “marital” and would therefore be subject to potential division by the court in subsequent divorce action.

Since the property is subject to potential division, it would fall to several factors contained in SC Code §20-3-620 which gives the Court direction on how to apportion the marital property.  Potential relevant factors in this case would include marital misconduct or fault of one of the spouses (since Ms. Lahti’s husband was allegedly abusive during the marriage which is a ground for divorce in South Carolina), the contribution of each spouse to the acquisition of the property, and finally a “catch all” that let’s the judge consider other “relevant factors”.

I don’t know exactly what a South Carolina Family Court Judge would do in this situation, but I think based on the abusive marriage and the time the parties have been separated (and that neither was relying on the other financially in any way) that very little of the lottery winnings (if any) would be apportioned to the husband.  Sorry dude!

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Divorce and Your Will

As soon as your divorce is final, you any provision leaving anything to your former spouse becomes void.  Therefore, your former spouse will no longer inherit from you.  Most of the time, that is what people, want, but occasionally, I have run into folks who still want their former spouse to inherit from them.  In that case, a new will must be prepared.  If you do not have a will, then when you are divorced, you do not have to worry about your former spouse inheriting from you.

In any case, after a divorce, I would recommend that you get with an estate planning attorney to have your estate plan reviewed to make sure it still does what you want it to do.

Divorce and Powers of Attorney/Healthcare Powers of Attorney

The law helps you out when you go through a divorce by automatically making provision  in your will that your former spouse will not inherit from you (if that’s what you want).  However, this is not so in the case of a power of attorney.  Your power of attorney is filed of public record to put the world on notice that you have someone else who can act on your behalf legally.  This notice is good until you officially revoke this power of attorney.  So, upon your divorce you should file a revocation of your power of attorney on the public record to make sure that your former spouse cannot legally bind you any longer (if that is your desire).  I would also recommend that you put other businesses that would have dealt with your former-spouse on your behalf in the past on notice that she no longer has that power.  These businesses would include doctors offices, banks, etc.

Your healthcare power of attorney is a little different.  This is not put on public record so when you create a new document, you automatically void your prior document.  However, you should make sure your healthcare providers have up-to-date copies with your current agents listed so they do not inadvertantly seek information or guidance from your former spouse.

Divorce and Life Insurance/Retirement Accounts

This is the biggie!  Once you and your former spouse go through your divorce and all of your assets have been divided (by agreement or by the court) you may be left with your retirement accounts and some life insurance.  These documents are considered “non-probate” assets, meaning they pass outside of the probate process and outside of your will because they have beneficiary clauses in them.  If you forget to change your beneficiary on these types of accounts, then your former spouse could take your life insurance or retirement account because you forgot to change the beneficiary form.  This may be disastrous if you are remarried when you die and leave nothing to your current spouse planning on the life insurance to take care of them.  It happens more than you think so be sure you make this change.

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