In North Carolina, the law doesn’t split marital assets down the middle. Instead, they are distributed equitably according to each spouse’s circumstances. So what does this mean for you? When a marriage is on the rocks, one spouse may engage in financial behavior that purposely depletes the marital assets. This is known as “dissipation of marital assets,” and it can significantly impact the equitable distribution of property during a divorce.

So, let’s look at marital property and assets in North Carolina and find out what is okay and what is not during separation and divorce.

Marital Property in North Carolina

In North Carolina, marital property is any asset either spouse acquires during marriage. Marital property includes income, savings, houses, cars, furniture, and anything else of value. This is the marital estate. These marital funds are the financial aspects of your lives together.

The court presumes that all property acquired during the marriage is marital property, regardless of how it is titled. Even if an asset is only in one spouse’s name, it may still be considered marital property and subject to equitable distribution in a divorce.

Debts incurred during the marriage are also marital property. However, there are some items that you may own as separate property.

North Carolina Law: What Constitutes Marital Assets?

According to North Carolina General Statutes § 50-20(a) and (b)(1), marital assets include all real and personal property acquired by either or both spouses during the marriage and before the date of separation.

So, anything acquired during the marriage, from real estate to retirement accounts, is generally considered marital property.

From the marriage act, through the divorce process, and until the final divorce decree, marital funds belong to you both.

So let’s look at what belongs to you alone in a marriage.

Separate Property in North Carolina

Separate property is anything:

  • Owned by either spouse before the marriage
  • Given to only one spouse during the marriage
  • Inherited by only one spouse during the marriage

For example, if your spouse’s sister gave her an expensive set of antique collectibles, they would belong only to her.

Gifts and inheritances are also separate if given to only one spouse. If your husband inherited a hunting cabin from his father and the deed is only in his name, the place belongs to him alone.

When considering the equitable distribution of assets, separate property does not count. The property you own before the marriage or as a gift to you alone during the marriage is yours. 

Separate property is free and clear of the divorce asset split.

Look at the date of acquisition to determine marital property vs. separate property: the date you bought or acquired the asset as a gift. If you’re not sure about the date of acquisition, your family law attorney can help you determine this information.

North Carolina Law: The Concept of Divisible Property

Divisible property, as defined by North Carolina General Statutes § 50-20(b)(4), includes all appreciation and diminution in value of marital property and divisible property occurring after the date of separation and before the date of distribution.

This means that any increase or decrease in the value of marital assets after separation but before the final distribution is also subject to the property division process.

How is Marital Property Divided in NC?

In North Carolina, you and your spouse may agree to divide assets however you choose. If you work out an agreement with your spouse about the distribution of property, the divorce judge will sign off on your divorce using the deal you’ve made together.

However, if you disagree on distributing your marital assets, you’ll end up before the judge, needing the court to divide your interests. A judge will often split your combined property 50/50.

However, in some situations, equitable distribution will not mean a 50/50 split. For example, if one spouse contributed more to acquiring a particular asset, that spouse may receive a more significant share of that specific asset.

Other factors can also come into play when deciding how to divide assets equitably.

If you’re considering removing marital assets before filing for divorce, talk with an experienced family law attorney who can give you the best advice regarding what you can keep.

What Does Equitable Distribution of Assets Mean?

The court may consider many factors before deciding what an equitable distribution of assets means in your case. A judge may look at the following:

  • Income of both spouses
  • Property
  • Length of the marriage
  • Debts
  • Child or spousal support obligations from a previous marriage
  • Who pays for the family home mortgage or rent
  • Who lives in the home
  • How much spouses worked during the marriage
  • Contributions by one spouse to the other’s education
  • Retirement accounts, life insurance accounts

Whether one spouse is more at fault for causing the divorce does not affect the distribution of assets unless they caused a loss of a significant amount of your total estate by their behavior.

For instance, a significant loss of marital assets can occur when a spouse decides to spend marital funds on an extramarital affair. Examples may include:

  • Buying expensive jewelry on a joint credit card
  • Hotel rooms on bank statements
  • Large purchases such as vacations with an affair partner

A spouse’s spending money on these types of items for a purpose unrelated to marital or personal needs dissipates assets.

What Marital Property Can I Take if I Move Out?

Removing assets before a divorce can be okay during separation, depending on the assets in question. A spouse’s actions in removing property they need to live is NOT dissipation of marital assets.

North Carolina General Statutes § 50-20(i1) allows for interim distributions of marital property, divisible property, or debt before the final judgment of equitable distribution. This means that the court can make temporary orders about who gets what, which could include property you might take if you move out.

If you have not involved the court in your separation agreements, you can take whatever you like with you when you divorce. However, be aware that if you take marital assets that your spouse also wants, you will need to negotiate this between your attorneys, in mediation, or in the courtroom before the final divorce decree.

The dissipation of marital assets is another thing entirely.

The Concept of Divisible Property

Divisible property, as defined by North Carolina General Statutes § 50-20(b)(4), includes all appreciation and diminution in value of marital property and divisible property occurring after the date of separation and before the date of distribution.

This means that any increase or decrease in the value of marital assets after separation but before the final distribution is also subject to division.

How Does Dissipation of One Spouse Affect Equitable Distribution?

When determining equitable distribution, the court considers various factors. One of these factors, as specified in North Carolina General Statutes § 50-20(c)(11a), is the acts of either party to maintain, preserve, develop, or expand; or to waste, neglect, devalue, or convert the marital property or divisible property during the period after separation and before distribution.

In other words, if your case goes to the courtroom, the court will look at whether you tried to preserve and develop assets or if you tried to waste them or use them for only your own good.

If you dissipate marital assets, this can influence the court’s decision on what constitutes an “equitable” distribution.

For example. immediately before or during a separation, a court or mediation attorney will see what you’ve done. For example, taking out a home equity line of credit for $30,000 and spending it all on frivolous trips with friends can affect your final divorce settlement.

Or using a joint bank account to give large gifts of money to family members for non-marital purposes could also be a type of asset dissipation.

The same goes for selling valuable items belonging to both of you and spending the cash on outrageous purchases. If one spouse is found to be spending money or have dissipated marital assets, this could influence the court’s decision on what constitutes an “equitable” distribution.

Doing something to hurt your spouse financially during the separation is not a good idea in the long run. If the other spouse can prove you took it without consideration of their needs during the separation period, this looks like bad behavior.

A better approach is to work with your spouse to develop a temporary separation agreement outlining how you will pay bills and who will live in the family home.

A family law and divorce attorney can help you divide marital assets fairly during separation. Working with a lawyer experienced in mediation can help you both work through who will take which items. 

Protecting Your Assets

Suppose you suspect that your spouse is dissipating marital assets. In that case, North Carolina General Statutes § 50-20(i) allows you to seek injunctive relief to prevent the disappearance, waste, or conversion of property alleged to be marital, divisible, or separate property.

This statute means you can file a dissipation claim asking the court to freeze assets or issue a court order preventing your spouse from depleting them further. If the spouse wastes more, the court will judge that the spouse has dissipated marital assets and may consider their financial transactions when deciding the equitable division of assets.

Dissipation of marital assets is a complex issue affecting the fair share of marital funds in a divorce settlement. Understanding North Carolina’s marital and divisible property laws can help you navigate this complex area and protect your financial interests.

Dividing property during a divorce can be complicated, but working with an experienced attorney can help make the process a little easier.

At Plekan Law, We’re Your Advocates

At Plekan Law, we recognize that dissipation of marital assets can add difficulties to an already challenging divorce process. Our experienced divorce attorneys are here to guide you through North Carolina’s equitable distribution laws, including issues related to dissipation.

Whether you’re concerned about protecting your assets or ensuring a fair division, we’re committed to advocating for your best interests. Don’t navigate this complicated legal landscape alone; let us provide the expert guidance and support you need.

Contact Plekan Law today for a consultation, and take the first step toward securing your financial future.