In North Carolina, equitable distribution is the process of dividing assets and debts that were acquired during marriage. One spouse must file for equitable distribution prior to the final divorce judgment to protect their rights to a court-ordered distribution of marital property.  The equitable distribution action is to ensure that each spouse receives an equitable share of the marital property as marriage is a partnership and each spouse a partner.

The process of equitable distribution can be a complicated process. First, each spouse must list all property, owned by either party, in an affidavit form.  Secondly, each property item must be classified as either marital property, separate property, or divisible property. Next, each property item is valued.  This information is then used to divide property between the parties.

Property Classification

Property listed on the affidavit is then classified as one of three classifications, marital property, separate property, or divisible property. 

Marital property is property both real and personal that was acquired by either spouse during the marriage.

Separate property is property that was acquired prior to the marriage or was acquired as a result of gift or inheritance and the property was not co-mingled with marital property.  Any passive income acquired from separate property is classified as separate property.

Divisible property is likely the most complicated.  It involves the modification of a marital asset in order for it to be divided.  Marital property with a change in value, after the date of separation, is classified as divisible property.  Property acquired after the date of separation as a result of the acts of either spouse during the marriage is also divisible. Any interest or income received from marital property after the date of separation is divisible. Also, changes to any marital debt after the date of separation is also considered divisible property.

 

Property Value

After property is classified, a fair market value must be assessed to each item.  Professionals such as  Real Estate Appraisers and Certified Public Accountants are consulted to determine the fair market value of property. 

 

Distributing Property

In general, it is preferred for marital property to be divided equally. However, a Judge may decide not to divide property equally but in another way that is equitable for both spouses.

 

Do I have to go to court?

Not necessarily, parties are required to participate in mediation prior to proceeding to trial. During mediation each spouse and their attorney will meet, generally at the mediator’s office, in an effort to reach an agreement. If an agreement is reached, both parties sign the agreement prior to leaving mediation.  If an agreement is not reached in mediation the parties continue to prepare for trial in which a judge will determine how the marital property is to be divided.  

 

Who pays for Mediation?

Costs for mediation are equally divided between each spouse.  

  

Factors the Court will consider in determining Equitable Distribution

  • 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 either spouse to preserve or waste property

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