Equitable Distribution

Equitable distribution of a marital estate in North Carolina often arises as an ancillary claim to divorce. When one party files for equitable distribution, the court must classify all the property presented as marital, divisible, or separate. 

Marital Property

Marital property is all real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of the separation of the parties, and presently owned. (N.C.G.S. 50-20) All marital property must be distributed by the court in an equitable distribution action. 

Divisible Property

Divisible property is all real and personal property as set forth below:

        a.         All appreciation and diminution in value of marital property and divisible property of the parties occurring after the date of separation and prior to the date of distribution, except that appreciation or diminution in value which is the result of postseparation actions or activities of a spouse shall not be treated as divisible property.

        b.         All property, property rights, or any portion thereof received after the date of separation but before the date of distribution that was acquired as a result of the efforts of either spouse during the marriage and before the date of separation, including, but not limited to, commissions, bonuses, and contractual rights.

        c.         Passive income from marital property received after the date of separation, including, but not limited to, interest and dividends.

       d.         Passive increases and passive decreases in marital debt and financing charges and interest related to marital debt.

N.C.G.S. 50-20

Divisible property, like marital property, must be distributed by a judge in an equitable distribution action. 

Separate Property

Separate property is all real and personal property acquired by a spouse before marriage or acquired by a spouse by devise, descent, or gift during the course of the marriage. However, property acquired by gift from the other spouse during the course of the marriage shall be considered separate property only if such an intention is stated in the conveyance. Property acquired in exchange for separate property shall remain separate property regardless of whether the title is in the name of the husband or wife or both and shall not be considered to be marital property unless a contrary intention is expressly stated in the conveyance. The increase in value of separate property and the income derived from separate property shall be considered separate property. All professional licenses and business licenses which would terminate on transfer shall be considered separate property. (N.C.G.S. 50-20)

Distribution Factors

Property, for purposes of equitable distribution, includes not just real or physical property, but all assets and debts, including bank accounts, retirement accounts, investments, business interests, credit card debts, loans, car notes, etc.

When it comes to the distribution of a marital estate, in North Carolina, equal is presumed equitable. However, there are certain circumstances in which an unequal distribution would be considered equitable. When considering how to distribute a marital estate the court must consider all of the following factors:

(1)        The income, property, and liabilities of each party at the time the division of property is to become effective.

(2)        Any obligation for support arising out of a prior marriage.

(3)        The duration of the marriage and the age and physical and mental health of both parties.

(4)        The need of a parent with custody of a child or children of the marriage to occupy or own the marital residence and to use or own its household effects.

(5)        The expectation of pension, retirement, or other deferred compensation rights that are not marital property.

(6)        Any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services, or lack thereof, as a spouse, parent, wage earner or homemaker.

(7)        Any direct or indirect contribution made by one spouse to help educate or develop the career potential of the other spouse.

(8)        Any direct contribution to an increase in value of separate property which occurs during the course of the marriage.

(9)        The liquid or nonliquid character of all marital property and divisible property.

(10)      The difficulty of evaluating any component asset or any interest in a business, corporation or profession, and the economic desirability of retaining such asset or interest, intact and free from any claim or interference by the other party.

(11)      The tax consequences to each party, including those federal and State tax consequences that would have been incurred if the marital and divisible property had been sold or liquidated on the date of valuation. The trial court may, however, in its discretion, consider whether or when such tax consequences are reasonably likely to occur in determining the equitable value deemed appropriate for this factor.

(11a)    Acts of either party to maintain, preserve, develop, or expand; or to waste, neglect, devalue or convert the marital property or divisible property, or both, during the period after separation of the parties and before the time of distribution.

(11b)    In the event of the death of either party prior to the entry of any order for the distribution of property made pursuant to this subsection:

a.         Property passing to the surviving spouse by will or through intestacy due to the death of a spouse.

b.         Property held as tenants by the entirety or as joint tenants with rights of survivorship passing to the surviving spouse due to the death of a spouse.

c.         Property passing to the surviving spouse from life insurance, individual retirement accounts, pension or profit-sharing plans, any private or governmental retirement plan or annuity of which the decedent controlled the designation of beneficiary (excluding any benefits under the federal social security system), or any other retirement accounts or contracts, due to the death of a spouse.

d.         The surviving spouse's right to claim an "elective share" pursuant to G.S. 30-3.1 through G.S. 30-33, unless otherwise waived.

(12)      Any other factor which the court finds to be just and proper.

N.C.G.S. 50-20

A claim for equitable distribution can be a very involved and complex process. If you believe you have a claim for equitable distribution, call us at 704-918-5529 to speak with an attorney today.