Background
When Tandy and Jerry Collier divorced, they executed a marital separation agreement — confirmed in a family court final order — that awarded Tandy (Wife) fifty percent of the marital portion of Jerry’s (Husband’s) retirement accounts. The parties agreed the intent was for Wife to receive half of those holdings as measured from the date marital litigation began, and that the division would be accomplished through an in-kind transfer of assets rather than a cash payment pegged to some past value.
The problem arose when the parties tried to implement the transfer. The retirement portfolio consists of index funds, bonds, and similar instruments whose value had changed — in this case appreciated — between the date litigation began and the actual distribution. Husband argued that Wife was entitled only to the value of her share as of the date of separation, not to the post-separation passive gains those assets had generated. The Pickens County Family Court agreed with Husband, finding Wife was not entitled to any passive appreciation. Wife appealed.
The Court’s Holding
Reversed. The Court of Appeals held the family court’s interpretation was inconsistent with a line of South Carolina precedent stretching back to Smith v. Smith, 294 S.C. 194, 363 S.E.2d 404 (Ct. App. 1987). In Smith, this court rejected the identical argument — that a husband should pay a wife only the value of marital stock as of the separation date — holding that “both parties would be entitled to any such appreciation” occurring after separation but before distribution. The panel found no basis to depart from that rule here.
The court canvassed subsequent decisions confirming the same principle: McDavid v. McDavid, 333 S.C. 490 (1999) (both spouses share in post-separation appreciation); Dixon v. Dixon, 334 S.C. 222 (Ct. App. 1999) (family court may consider post-filing appreciation when apportioning the marital estate); Fields v. Fields, 342 S.C. 182 (Ct. App. 2000) (parties share in appreciation or depreciation after separation); Burch v. Burch, 395 S.C. 318 (2011) (fairer to value passive assets at or near the final hearing because both parties equally deserve any increase or decrease). Because the agreement and final order awarded Wife half of the marital portion of the accounts — defined by dates, not dollar figures — Wife was entitled to half of those assets including their passive gains and losses. The court emphasized that the assets belonged to her and the change in their value was hers as well. The case was reversed and remanded.
Key Takeaways
- Under established South Carolina precedent, both spouses are entitled to share in passive gains and losses that marital retirement assets experience between the date of separation and the date of actual distribution. A separation agreement that divides “the marital portion” of accounts in kind — using dates rather than dollar values to define what is marital — captures that appreciation automatically.
- A husband’s concession that the intent was an in-kind distribution is inconsistent with simultaneously arguing the wife receives no passive appreciation. An in-kind distribution of investment assets inherently includes their current value, which incorporates all subsequent passive market movement.
- Family court practitioners drafting separation agreements should use explicit language if the parties intend to peg a retirement account distribution to a specific past valuation date. Without such language, South Carolina courts will apply the presumption that both spouses share equally in passive market movement through the date of actual transfer.
- The word “half” of an index fund means half of whatever it is worth at distribution — not half of what it was worth at filing. Agreements that are silent on investment fluctuation will be read in favor of in-kind division at current value.
Why It Matters
Collier v. Collier reinforces South Carolina’s long-standing rule that passive appreciation in marital assets is marital gain — neither spouse can unilaterally capture post-separation market growth by delaying distribution. For family law practitioners, the case is a useful reminder to address investment-asset fluctuation expressly in any agreement involving retirement accounts, brokerage holdings, or other market-linked assets. Where the agreement is silent, the court will apply the Smith–Burch line and treat post-separation passive gains as jointly owned.
For the non-titled spouse awaiting distribution, Collier confirms that delay in implementation does not forfeit passive gains that have accrued during the pendency of the proceeding. Conversely, for the titled spouse of a portfolio that has appreciated significantly after separation, the decision signals that in-kind division language in a separation agreement will not shield those gains from the other spouse’s share.