Marital property as lump sum alimony

Posted Monday, December 2nd, 2019 by Gregory Forman
Filed under Alimony/Spousal Support, Equitable Distribution/Property Division, Litigation Strategy, Of Interest to Family Court Litigants, Of Interest to Family Law Attorneys, South Carolina Specific

There are occasionally cases in which a spouse who would typically pay significant permanent periodic alimony as part of a marital dissolution has destroyed his career around the time of the parties’ separation. Often this career destruction was the cause of the marital dissolution: a spouse charged with a crime that leaves him incarcerated or unable to continue in his career; job misconduct or substance abuse issues that result in employment termination.

When such supporting spouses lose their earning capacity due to “misconduct” during or shortly before marital litigation, the family court is left in an awkward position. If it requires that spouse to pay permanent periodic alimony based upon his recent earning capacity, it is likely setting that spouse up for failure (and jail) as it would be basing support on an unrealistic earning capacity. Further the supported spouse is unlikely to receive the alimony awarded. However, if the family court doesn’t require that spouse to pay alimony, then the supported spouse will incur a substantial reduction in lifestyle due to the supporting spouse’s misconduct. That isn’t just.

The court could attempt to effect a just result by giving the supported spouse a majority of the marital assets. In dividing marital property, South Carolina’s equitable distribution statute, S.C. Code § 20-3-620(B)(2), allows the family court to consider, “marital misconduct or fault of either or both parties, whether or not used as a basis for a divorce as such, if the misconduct affects or has affected the economic circumstances of the parties, or contributed to the breakup of the marriage…” In practice, our appellate courts rarely approve a division in a long-term marriage more extreme than 60/40. See Doe v. Doe, 370 S.C. 206, 634 S.E.2d 51 (Ct.App.2006) (reducing 70/30 division to 60/40 due to family court’s over reliance on marital misconduct).

However, what if, in this situation, the family court could essentially award the supported spouse all of the marital assets? That would be more just than awarding the supported spouse a mere 60% of the marital estate. Through a creative application of lump sum alimony, the family court could do this. The family court could give the supported spouse 50% (or 60%) of the marital estate and then award that spouse the supporting spouse’s share of the marital estate as lump sum alimony. Lump sum alimony can be awarded in exceptional cases where special circumstances require it. Johnson v. Johnson, 296 S.C. 289, 372 S.E.2d 107, 114 (Ct.App. 1988). A supporting spouse destroying his earning capacity through misconduct might just be one of those exceptional cases and special circumstances.

Where a supporting spouse’s misconduct has diminished his earning capacity, the family court has three options: 1) issue a permanent periodic alimony award based on the prior earning capacity of the supporting spouse with the understanding that the supporting spouse likely can’t pay it and the supported spouse likely won’t receive it; 2) award the supported spouse a majority–but not a supermajority–of the marital estate and hope she can maintain the marital lifestyle from a majority of the assets; 3) award the supported spouse lump sum alimony from the supporting spouse’s share of the marital assets (essentially leaving the supporting spouse with no assets but no support obligation and the supported spouse with the whole marital estate).

I see few reasons why that third option isn’t the best. Until the appellate courts inform us otherwise, it’s an argument worth making.

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