In North Carolina, equitable distribution is the process of dividing assets and debts that were acquired during marriage. This includes anything from property and money to debt and investments.
There are a few ways to determine equitable distribution. One way is to work out the details yourselves with your spouse. If you can agree about which marital assets belong to you and which belong to your spouse, North Carolina law allows you to work this out outside of the courtroom.
Court-Ordered Property Division
However, if equal distribution of property and debt is not something you can agree on with your spouse, one of you must file an Equitable Distribution action prior to the final divorce judgment. Filing before the court makes a final judgment protects your rights to a court-ordered distribution of marital property.
The process of equitable distribution can be complicated, so an attorney specializing in separation and divorce can protect your rights as you go through the process of dividing property equally.
How Equitable Distribution Works
The process of equitable distribution can be complex, but we’ve broken it down into a simple three part process to help you see how spouses work through dividing marital property.
Step One: Make a List, Check it Twice
You and your spouse must create a list all marital property and personal property, owned by each of you. This may be difficult, but you must list all of your marital and personal property including:
- Real property
- Property acquired during the marriage
- Separate property
- Marital property
- Retirement accounts
- Bank accounts
Step Two: Property Classification
Each property item must be classified as either marital property, separate property, or divisible property.
Marital Property: Both real and personal property acquired by you or your spouse during the marriage.
Separate Property: Property that you acquired prior to the marriage or as a result of gift or inheritance. You must not have comingled separate property with marital property. Also, any passive income acquired from separate property is classified as separate property.
Divisible Property: Marital and divisible property that you or your spouse may modify in order to divide the proceeds.
Types of divisible property include:
- Marital property with a change in value, after the date of separation
- Property acquired after the date of separation as a result of the acts of either spouse during the marriage.
- Any interest or income received from marital property after the date of separation.
- Changes to any marital debt after the date of separation is also considered divisible property.
Step Three: Assess the Fair Market Value
After you and your spouse classify property, you must assess each item at a fair market value. You may consult professionals such as Real Estate Appraisers and Certified Public Accountants to determine the fair market value of property.
You and your spouse must define, classify, and value each item so that the judge may determine equitable distribution.
Equitable Distribution in North Carolina
In general, Judges prefer to divide marital property equally. However, a Judge may decide on an “unequal division” of property to make other factors more equal for both spouses.
A Judge may use equal division or marital settlement agreements to determine how to divide property.
Many factors affect equitable distribution, including:
- Income of each party
- Property of each party
- Debt of each party
- Support obligations from a previous marriage
- The length of the marriage
- Age, health, and education of each party
- Expectation of retirement benefits
- Contributions that have increased the value of property
- The nature of property and ability to liquidate the property
- Tax implications
- Actions taken by one spouse to preserve or waste property
Do I Have to Go to Court for My Equitable Distribution Case?
Often, spouses may reach agreements regarding equitable distribution of the marital estate through their own actions. Ways to settle with your spouse out of court include:
- Separation Agreement
- File an action through negotiations
- Go through mediation
Working with an experienced attorney can help you avoid getting an unequal split. If the other spouse won’t work with you dividing property, a knowledgeable attorney can help you find your way through!
Make Equitable Distribution in North Carolina Easier
For help working through your equitable distribution contact us at Plekan Law, PLLC to schedule a consultation. Our family law and divorce attorneys can help you consider everything from your marital residence to tax consequences. Marital property distribution can be a sticking point in a separation and divorce, but with our legal assistance, you can find a way through this and move forward with your life!