Community Property Lawyer in North Carolina for Your Case

In North Carolina, parties going through a divorce go through a process known as equitable distribution to divide their marital assets and debts. Whether parties are able to resolve their matter outside of court or if court is necessary, the equitable distribution process defines the division of marital property in North Carolina divorce cases.

Equitable Distribution Process

In general, the equitable distribution process is composed of three distinct stages, which include the following:

1. Identifying and classifying property.
2. Valuing property.
3. Dividing property amongst the parties.

Identifying and Classifying Property

The first step to any equitable distribution case is identifying both spouses’ various property, including homes, bank accounts, retirement accounts, stocks, restricted shares, vehicles, personal property, debts, and various other kinds of property. Once all property has been identified, the next step is to classify the property.

Classification of Assets

North Carolina law defines three general types of property: (1) separate property; (2) marital property; and (3) divisible property. Separate property generally includes all property owned by a spouse before the marriage, but also includes certain property acquired during the marriage such as property received as a gift from family members or property that was inherited by a spouse during the marriage. Separate property can also include passive growth of separate property during the marriage and income from separate property during the marriage, depending on the situation. Importantly, separate property is not subject to distribution in the equitable distribution process. In other words, the separate property of each spouse remains their separate property following divorce.

Marital property generally refers to all property acquired by either of the spouses between their date of marriage and the ultimate date of separation, with some important exceptions. A crucial component of marital property is that, generally speaking, property acquired during the marriage is considered marital regardless of how the property is titled. For example, if one spouse contributes to a retirement account from the time they are married to the time the parties separate, those retirement contributions are considered marital property even though they are titled in just one spouse’s name.

Divisible property refers to several categories of property acquired after separation, including passive gains or losses on the value of marital property post-separation, passive income received from marital property following separation, passive changes to marital debt and financing charges, and certain property that was earned during the marriage but not received until a later date. Divisible property can be a very important form of property to address, given that the value of marital assets such as retirement accounts or homes often grows substantially following separation, and that growth may be subject to division as divisible property. In addition, divisible property can include income received following separation, such as bonuses received after the parties separate or even restricted shares as they vest over a period of years.

While there are general guidelines for what constitutes separate property, marital property, and divisible property, it’s wise to speak with an attorney about any specific considerations that may apply in your case, given that there are many exceptions to the general rules for classifying property. Our team of seasoned property division lawyers is able to assist in your case by identifying all of your property and helping you address the classification of each asset.

Classification of Debts

While the division of marital assets is an important part of any divorce, the distribution of debts is often equally as important, if not more important, depending on the case. The first step to distributing debts is to determine what constitutes a marital debt and what is considered a separate debt. In general, a debt will be considered marital in nature only if it was incurred between the parties’ date of marriage and date of separation, and also was acquired for a joint benefit. While a debt incurred in one spouse’s name can still be considered a marital debt, a further analysis is necessary to determine whether the debt indeed served a marital benefit for the parties.

Valuing Property

The second step in the equitable distribution process is valuing all of the parties’ property. In general, property is valued at the time of the parties’ separation. While this valuation may be relatively simple for certain properties, such as bank accounts and credit cards that display a clear balance on a specific date, the process can be more difficult in other areas. Valuing fluid investments in retirement accounts and brokerage plans, as well as other types of property for which a value is more subjective, such as homes and businesses, can be far more complex. In the event the value of property is not readily available, you may need to speak with your attorney about what steps are necessary, including involving third-party experts such as real estate appraisers to appraise property, and other experts to value a business. One of our property division attorneys can first talk through the valuation process with you, as there are numerous variables to consider before involving third-party professionals.

Distributing Property

The final step to the equitable distribution process is the distribution of property amongst the parties. At this stage, parties or a Judge will decide how to distribute marital assets, marital debts, and divisible property amongst the parties.

Equal Distribution vs. Unequal Distribution

In North Carolina, there is a general presumption that an equal division of property is itself an equitable distribution of property. This means that there is a preference for parties to negotiate, or Judges to order, an equal split of the marital estate. However, as with most rules, there are exceptions, and thus parties and judges alike may distribute property in an unequal manner based on the circumstances of a given case. When determining whether an unequal distribution is material, North Carolina law establishes a list of distributional factors to be considered.

Distributional Factors

When deciding whether to order an unequal distribution of property, a judge will review a long list of distributional factors and evaluate how each one applies to your case. These distributional factors are defined by North Carolina law and include such factors as the ages of the parties, the parties’ respective incomes, the need of a parent to maintain the marital home for minor children, the duration of the marriage, either spouse’s tax consequences resulting from certain property they’ll receive, and other economic circumstances. Ultimately, Judges have broad authority to weigh these distributional factors when determining if and how to order an unequal distribution of property.

When it comes to your case, one of our Charlotte equitable distribution lawyers will walk you through the three steps of equitable distribution in your case, including preparing an analysis of all of your property and determining how it might be divided based on the distributional factors that apply in your situation.