Equitable Distribution Property Division In North Carolina
The distribution of property between a couple obtaining a divorce in North Carolina is a complex process. You must file for an equitable distribution of property after being separated but prior to a divorce judgment being entered by the court or you will lose forever all rights to an equitable distribution of marital assets. Filing for equitable distribution preserves your right to an equitable distribution of all marital assets. That right to an equitable distribution will survive your death if you die after the request for an equitable distribution is filed.
Equitable distribution actions require the assistance of an experienced attorney to make sure your rights are protected. If you are contemplating a divorce or if you believe your spouse is going to file for a divorce immediately contact an attorney who routinely handles domestic cases for a consultation.
There are two processes by which a division of marital property can be made. One is by agreement of the parties with a Separation Agreement and Property Settlement the other is by a court order for equitable distribution. Your attorney will advise you to obtain a disclosure under oath of the property your spouse has regardless of which process you decide to use.
It is always less expensive and more advantageous if you and your spouse can mutually agree on the division of marital assets in a Separation Agreement and Property Settlement. This will allow you and your spouse to control how the property is divided rather than relinquish that decision to a judge. However, reaching a mutual agreement as to how marital property should be divided is never easy in a divorce situation and not always possible at least initially.
Filing an Equitable Distribution Claim
If you file an equitable distribution claim there are important deadlines that must be met. Your attorney will advise you of the deadlines. The court will assign equitable distribution cases to a mediator prior to a court order dividing the property in an attempt to reach a mutually agreeable division of the property. Many cases will be resolved between the parties with the assistance of the mediator prior to the action going to trial.
Marital property is defined by North Carolina law to include all real and personal property acquired by either spouse during the marriage and before the parties were separated and which is currently owned with a couple exceptions. Real and personal property is considered separate property and not subject to equitable distribution if it was acquired before the marriage or if it was a bequest, devise, or gift during the marriage unless the gift is from the other spouse and then it is considered as separate property only if the intention was that the gift remain separate and that intention was stated at the time the gift was made. Most professional licenses and business licenses are considered separate property as are any increase in value of separate property and any income earned from separate property.
Divisible property is also subject to the equitable distribution laws and includes all appreciation or diminution in the value of marital property occurring after the date of separation and prior to the order of distribution except that which is the result of the actions of one spouse after the separation. Divisible property also includes property received after the separation that was acquired as a result of the efforts of either spouse during the marriage and before the separation, for example bonuses, commissions, and contractual rights. Passive income from marital property and increases and decreases in marital debt and financing charges and interest related to marital debt are also considered to be divisible property.
The local rules govern the deadline in which an equitable inventory must be filed on the opposing side. The party who asserted the claim is required to prepare and serve on the opposing party an inventory listing all property claimed to be marital property and all property claimed to be separate property and the estimated value of each item identified as of the date of separation. The opposing party then has to respond.
After the filing of the initial cause for equitable distribution, the party first serving the pleading or application shall apply to the court for a scheduling and discovery conference. If that party fails to make application, then the other party may do so. The purpose of the conference is to determine a schedule of discovery as well as the appointment of any expert witnesses and rule on any pending motions and set a date for an initial pretrial conference.
The initial pretrial conference is to determine the status of the case and set a deadline for the completion of discovery and of any mediated settlement conferences and establish a final pretrial date after which the case will proceed to trial.
If either party is found to willfully or unreasonably be delaying the proceedings they can be ordered to pay the other party reasonable expenses and damages incurred by the delay.
Factors Considered to Reach An Equitable Distribution
Equitable distribution does not require the court to split marital and divisible property equally between the parties but rather distribute the marital property fairly between the parties. Factors the court will consider when dividing the property are:
- Each parties’ income, separate property and liabilities;
- Each parties’ obligation to pay support arising out of a prior marriage;
- The duration of the marriage being dissolved and the age and physical and mental health of the parties;
- The need of the custodial parent of children of this marriage to live in or own the marital residence and have the use of the household effects;
- Each parties’ expectation of a pension, retirement income or other deferred compensation that is not considered as marital property;
- Any claim to, interest in or contribution made by one party toward the acquisition of marital property held in the name of the other party including the contributions of lack thereof services as a spouse, parent, wage earner or homemaker;
- Any contribution made by one spouse to help educate or develop the career of the other spouse;
- Any contribution which increased the value of separate property during the course of the marriage;
- The liquid or non-liquid nature of all marital property;
- If it is difficult to evaluate any asset or interest in a business, corporation or profession or if it is not economically desirable to give the other party a claim to interest in a business, corporation or profession;
- The tax consequences of the equitable distribution of property to both parties;
- Acts of either party to maintain, preserve, develop or expand or acts to waste, neglect, devalues or convert marital property or divisible property after the separation of the parties and before the distribution of the property;
- If either party dies prior to the order for distribution of the property the court shall take into consideration the property passing to the other spouse by will or through intestacy or by joint tenancy with rights of survivorship and any life insurance, retirement benefits, pensions, profit sharing plans or annuity of which the deceased controlled the designation of beneficiary;
- And the court may consider all other factors the court finds to be just and proper.
Other Equitable Distribution Relief
If you do not trust your spouse or have reason to fear that she or he may dispose of or other cause marital property or divisible property to be squandered you may seek injunctive relief to prevent the other spouse from disposing of or otherwise decreasing the value of the property. The court may in lieu of granting an injunction may require a bond or other assurance be posted to protect the interest in the property of the spouse seeking relief.
A spouse may also request the court order the return of separate property which was removed from the marital home or from the possession of its owner by the other spouse and the court may order reasonable counsel fees and court costs incurred to regain possession be paid by the offending spouse so long as the fees do not exceed the value of the property removed.
The Court will often make an interim or partial distribution of the marital property and enter an order declaring what is separate property. An interim order may be made anytime after the action for equitable distribution has been filed and prior to the final judgment being entered unless there is good cause shown that there should not be an interim distribution. The partial distribution may include a distributive award of marital property, marital debt, divisible property or divisible debt. Any interim order will be taken into consideration and proper credit given in a final equitable distribution.
The court will determine an equitable distribution without taking regard to alimony for either party or support of the children of both parties.