Equitable Distribution During Divorce In North Carolina

Puzzle house is divided into two equal parts by a lawyer in a divorce process. Protection of rights. Conflict resolution. Court, justice. Disputes over fair division of marital property real estate.

There are many issues that must be determined before a couple can divorce. One of the most important matters that must be addressed before a marriage can legally be ended is the division of property. Importantly, North Carolina follows the rule of “equitable distribution” when it comes to dividing property and assets between spouses. This means that courts will distribute property between spouses in a way that is deemed fair.

How is Equitable Distribution Determined?

Unlike in community property states where marital property is divided in half upon divorce, courts have discretion regarding how assets and debts should be allocated in an equitable distribution state such as North Carolina. Although courts presume that an equal split of the marital property is deemed to be “fair,” the law allows an unequal distribution of property in cases where a 50/50 division would not be just.

A judge will determine a wide variety of factors in determining an equitable split of property, including the following:

  • The income, debts, and property of each spouse
  • The length of the marriage
  • Child or spousal support obligations from a previous marriage
  • The age and health of both spouses
  • The needs of a spouse with residential custody to live in the marital home
  • An expectation of pension, retirement, or other deferred compensation rights that are not marital property
  • A spouse’s homemaker contributions
  • Direct or indirect contributions made by a spouse to the other’s career or education
  • Any contribution made by one spouse during the marriage that increases the value of the other’s separate property
  • The difficulty of evaluating any component asset or any interest in a business
  • The federal and state tax consequences to either party
  • Any acts by either spouse to maintain or increase the value of marital property
  • Any acts by either spouse that waste or devalue the marital property
  • Other factors the court finds just and proper

A court cannot consider marital fault, such as adultery or domestic violence, when it comes to dividing property. However, it can look at a spouse’s efforts to waste, devalue, or neglect marital property after the time of separation. In cases where a spouse dissipated marital assets, the other spouse may be entitled to a greater share of marital property as a remedy.

It is essential to understand that there is no definitive time period in which to file for equitable distribution. The equitable distribution process can be used at any time between the time the parties have separated, and the divorce decree is issued. In the event the couple is not living apart or the divorce has been finalized, the statutory process is not applicable. Injunctive relief to prevent assets from disappearing may also be awarded before or after an equitable distribution action has been initiated.

What Property is Subject to Equitable Division?

Before property can be divided in a North Carolina divorce, it must be classified as either separate property or marital property. In North Carolina, separate property refers to assets or debts owned by one spouse individually. All property (real estate or personal property) acquired by a spouse prior to marriage, or acquired by gift or inheritance during the marriage, is considered separate property. In contrast, marital property is defined as any property acquired by either spouse during the marriage.

In addition, courts in North Carolina consider another category of assets — divisible property. This type of property includes the change in value (any increase or decrease) to the marital assets or debts after the date of separation, but before the divorce judgment is signed. It can also include income from marital property either spouse received following the separation.

Critically, marital property and divisible property are both subject to division in divorce. Separate property remains with the original owner after divorce. However, before any property can be distributed between the spouses, it must be assigned a fair market value.

A court will also assess whether any separate property was commingled with marital property. When assets are commingled, property division can be much more complex.

Does a Court Always Need to Determine Property Division?

In some cases, property division may not need to be addressed in court. If the parties can reach a settlement concerning how assets and property should be split, the matter of equitable distribution might not have to be litigated. It’s crucial to obtain an accurate appraisal of the marital property subject to distribution in order to ensure a fair outcome is reached.

It's generally best for parties to determine how they will divide their property, rather than let a judge decide. This allows the spouses to remain in control of the outcome of their divorce — and maintain amicability. If the parties cannot reach a settlement between themselves, they may find mediation or the collaborative divorce process useful to help them reach an amicable resolution.

Contact an Experienced Equitable Distribution Attorney in North Carolina

Dividing property pursuant to a divorce can be emotionally overwhelming and legally complex. With offices located in Moyock and Elizabeth City, The Twiford Law Firm provides knowledgeable counsel and experienced advocacy for equitable distribution and divorce matters throughout Northeastern North Carolina and the Outer Banks. Contact us today to schedule a consultation to learn how we can help.

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