If you are getting a divorce, it is important to know what property the Court is likely going to give to you and what property your former spouse is going to get from the Court. North Carolina’s process of dividing property between spouses is known as equitable distribution. Equitable distribution is governed by North Carolina General Statute § 50-20. This article is meant to provide a basis understanding of the equitable distribution process in North Carolina. For more information, contact Beaver Courie Sternlicht Hearp & Broadfoot, P.A.
Once parties separate, either spouse may file for equitable distribution or property settlement. Equitable distribution is the processes by which the court divides property between spouses. Equitable distribution is a three step process. First, the court must classify all property. Second, the court must value the property. Third, the court distributes the property.
As to the first step of equitable distribution, the court must classify all property. North Carolina General Statute § 50-20 defines three types of property—martial property, separate property and divisible property. Below are the definitions of each per N.C.G.S. § 50-20.
Martial property means 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, except property determined to be separate property or divisible property in accordance with subdivision (2) or (4) of this subsection. Marital property includes all vested and nonvested pension, retirement, and other deferred compensation rights, and vested and nonvested military pensions eligible under the federal Uniformed Services Former Spouses’ Protection Act. It is presumed that all property acquired after the date of marriage and before the date of separation is marital property except property which is separate property under subdivision (2) of this subsection. It is presumed that all real property creating a tenancy by the entirety acquired after the date of marriage and before the date of separation is marital property. Either presumption may be rebutted by the greater weight of the evidence.
Separate property means 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.
Divisible property means all real and personal property as setforth 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.
North Carolina law recognizes that some property may have a dual character. For example, a home which is purchased after the date of marriage with a down payment of funds from one spouse which was saved prior to the marriage may be identified as partially separate and partially martial. (Note: This same home may be considered entirely marital if the down payment is considered a gift to the marriage.)
After a court identifies the three types of property (martial property, separate property and divisible property), the court must then value the martial property and divisible property. Under North Carolina’s equitable distribution statutes, the court only has the authority to divide martial and divisible property. Martial property is valued as of the date of separation. Divisible property is not valued as of the date of separation. Instead, divisible property is valued as of the date of distribution.
Once a court identifies and values property, the final step is for the court to distribute the property. North Carolina equitable distribution statues have a presumption that an equal distribution of the martial and divisible property is appropriate. This presumption, however, may be overcome based upon a list of factors which may be considered by the court. This list of factors is found in North Carolina General Statute § 50-2-(c).
While equitable distribution consists of only three steps, each of those steps is extremely complicated. If you are considering divorce or in the process of divorce, speak to an attorney today. You will waive your right to equitable distribution if you fail to act in a timely manner.
Contact Cristina Quantock if you considering a divorce and want to make sure you are prepared.
Contact Cristina Quantock if you are considering a divorce and want to make sure you are prepared.