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South Dakota Property Division
Property Distribution Laws in South Dakota

In South Dakota the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the property is divided by the Circuit Court within the Judgment of Divorce.

South Dakota is an equitable distribution state, and all property is subject to distribution. All marital property will be divided in an equitable fashion according to the court unless agreed otherwise by the spouses. The appreciation of all property is marital. In South Dakota, it does not matter whether title to property is in the husband’s name, the wife’s name, or both. Regardless of title, the court can split the property or even give it to the other spouse if that’s equitable.

When the parties are unable to reach a settlement, the Circuit Court distributes the marital assets between the two parties in an equitable fashion. Equitable does not mean equal, or even half, but rather what is deemed by the Circuit Court to be fair.

Factors in Equitable Distribution

According to South Dakota Laws - Volume 9A - Title 25 - Chapters: 25-4-44, 25-4-45, in making a property award, the Circuit Court considers:

  • the contribution each spouse had to the acquisition of the marital property;
  • the value of each spouses separate property;
  • the amount of time the spouses have been married; the age and health condition of each spouse;
  • the current and future earning capacity of each spouse; and
  • the value of the property being distributed as well as the income potential of that property.

Fault is not considered in awarding of property except as it may be relevant to the acquisition of property during the marriage.

Marital Property vs. Separate Property

When a couple divorces in South Dakota, everything they own is either marital or separate property. Marital property belongs to the marriage. Generally, this type of property is acquired or earned during the marriage. Property used for the benefit of the marriage or shared with the other spouse, even if it began as separate property, may become marital property. Separate property belongs to one spouse before the marriage. It could also include some property given only to one spouse during the marriage, like a gift or an inheritance.

Property Defined

Property is either marital or separate, and it includes assets and liabilities. The most common types of property divided at divorce are real property like the family home, personal property like jewelry, and intangible property like income, dividends, benefits, and even debts. After the court characterizes any disputed item of property as marital or separate, it must evaluate the property’s value, usually using information provided by the spouses.

Valuing and Dividing Property

First, the court classifies assets and liabilities, property and debt, as marital or separate. Then it assigns a monetary value to the marital property and debt. Finally, it distributes the marital assets between the two parties in an equitable manner.

The Marital Home

In South Dakota, as in many jurisdictions, the equity in the marital home is often one of the biggest assets the spouses divide. The equity is the market value of the house, less any debts or liens against it. Equity is established by determining what the current market value of the home is at the time of separation. Once the spouses agree to a current market value, any debts associated with the property (mortgage, taxes, home equity loans, etc.) are deducted from the market value to arrive at the equity to be divided. Normally, making this calculation requires a paid real estate appraisal or a real estate agent can prepare a market analysis for free.

From there, couples choose one of three options to divide the equity:

  • The spouses sell the home and divide the proceeds.
  • One of the parties may refinance the home and “buy out” the other party.
  • One spouse (usually the custodial parent) remains in the home with the exclusive use and possession for a certain period of time (for example, until the youngest child graduates from high school), then either buys out the other spouse or sells the home and divides the proceeds.

Pensions and Retirement Accounts

In South Dakota vested pensions are marital property. A pension vests when all the requirements to receive the pension have been met. Unvested pensions are also marital property. Until the pension has vested, the person under whom the pension is maintained has only an expectancy of interest in the pension.

Several different methods of valuation are used in determining how much a marital asset is worth, depending upon the asset to be valued and the level of agreement between the parties. Courts generally accept the value when the spouses mutually agree on a value of a particular asset. Experts may be retained by the parties or by the courts to determine the value of marital assets if the parties cannot agree. Such experts may include accountants, real estate or business appraisers, or pension valuators. The use of experts adds to the cost of the divorce.

In South Dakota the court may include the retirement benefits and plans earned by both spouses as marital assets available for division. Retirement benefits vary greatly but can generally be divided into two groups:

  • Defined Contribution Plans: A defined amount of money belonging to the employee. The employee and/or the employer make defined contributions. The balance of the plan is constantly changing, but its value is definable at any given point. 401(k)’s, 403(b)’s and profit sharing plans fall into this category.
  • Defined Benefit Plans: A retirement benefit where an employer promises to pay a benefit to an employee sometime in the future, based upon some type of formula. Normally, this formula is based on the employee’s salary near the end of his or her career and the number of years he or she worked for the employer before retirement. Defined benefit plans are much more complicated to value and often require the professional evaluation of an actuary to determine exact values.

In South Dakota if spouses share in each other’s retirement or pension plan, a Qualified Domestic Relations Order must be completed. A QDRO is a written set of instructions that explains to a plan administrator that two parties are dividing pension benefits. The instructions set forth the terms and conditions of the distribution - how much of the benefits are to be paid to each party, when such benefits can be paid, how such benefits should be paid, etc.

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