Property Division FAQ
What is “equitable distribution”?
Equitable distribution is the method used in North Carolina for dividing the marital assets in a manner that is fair and equitable for both parties. “Equitable” means “fair,” so equitable distribution really means a fair distribution.
Who decides how our assets will be divided?
The parties can decide how to divide their assets and debts. This is often done through a contract called a separation agreement. If the parties cannot agree on how to divide their property, then a party can file a court action to have a judge make the decision.
Which property gets divided in equitable distribution?
Property held by the parties in a marriage is categorized either “marital property” or “separate property”, and property is assumed to be marital property unless proven otherwise. Only marital property is subject to equitable distribution in a divorce. Separate property falls into 3 categories: property owned by one spouse prior to the date of marriage; inherited property; and, property acquired by gift from someone other than one’s spouse. The division of the marital property is that which is “just and right” in accordance with the court’s ruling. Generally speaking, this is a 50/50 split, absent some circumstance that would make such a split unfair.
I heard that North Carolina law says I get half of my spouse’s property. Is that true?
North Carolina law states that an equitable distribution (read: fair division) of marital property is assumed to be a 50/50 division unless there are reasons that a 50/50 split would not be fair.
The courts consider a number of factors when deciding what an equitable distribution is, pursuant to NC. Gen. Stat. § 50-20(c):
- The income, property, and liabilities of each party at the time the division of property is to become effective.
- Any obligation for support arising out of a prior marriage.
- The duration of the marriage and the age and physical and mental health of both parties.
- 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.
- The expectation of pension, retirement, or other deferred compensation rights that are not marital property.
- 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.
- Any direct or indirect contribution made by one spouse to help educate or develop the career potential of the other spouse.
- Any direct contribution to an increase in value of separate property which occurs during the course of the marriage.
- The liquid or nonliquid character of all marital property and divisible property.
- 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.
- 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.
- 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.
- 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:
- Property passing to the surviving spouse by will or through intestacy due to the death of a spouse.
- 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.
- 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.
- 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.
- Any other factor which the court finds to be just and proper.
I have been a stay-at-home mom, out of the workforce, for several years now. Am I entitled to any of my husband’s retirement account?
A stay-at-home parent may be entitled to a part of the marital portion of their spouse’s retirement account. The amount is determined either by the parties through a separation agreement, through the mediation process or by the court.
Who gets to keep the house? And who decides?
If the parties divide their property through a separation agreement, then they decide how the house is dealt with. If the parties cannot agree and a court action is filed, then a judge will consider a number of factors when deciding which party gets the house. The judge may consider the ages of the parties, the value of the house and how much is owed on it, if there are minor children and their needs, and the parties’ other assets and debts. The judge may also consider each party’s ability to pay for the mortgage, utilities and upkeep of the house. The judge may find that neither party can truly afford to keep the house, and may decide that the house should be sold and any proceeds divided between the parties.
The information contained on this site is provided as a public service for informational purposes only and is not intended to be a comprehensive statement of the law. The reader is advised to check for changes to current law and to consult with a qualified attorney on any legal issue before taking action of any kind. The information presented on this site should not be construed to be formal legal advice or to create or imply the formation of a lawyer-client relationship between the reader and this firm.
Written By: John McNeil