Equitable Distribution

Are you are going through a separation? Knowing what will happen with your property is very important. Do you want to know how issues of property distribution are handled?

Equitable distribution is the distribution of marital assets and marital debt. There is a presumption that any item that came into the marital estate after the date of marriage is considered marital property and shall therefore be subject to distribution. However, if something is considered a separate item, it would be awarded to the party whose it is and they would have to prove that it was separate property. An example of separate property coming into the marriage would be a gift from a relative of some sort. Furthermore, any items that were owned prior to the marriage that were not placed in the name of both parties would generally be considered separate property. As an example, if you owned a car prior to the marriage and traded that car and got another car during the marriage, that second car would still usually be considered your separate property.

The strong presumption in North Carolina is that martial assets will be divided equally, or 50/50. If a party wants to have an unequal distribution, they must carry the burden of proving that an equal division would not be fair or equitable and that an unequal division would in fact be equitable.

The factors the court considers are:

  1. The income, property, and liabilities of each party at the time the division of property is to become effective.
  2. Any obligation for support arising out of a prior marriage.
  3. The duration of the marriage and the age and physical and mental health of both parties.
  4. The need of a parent with custody of a child or children of the marriage to occupy or own the marital residence and to use or own its household effects.
  5. The expectation of pension, retirement, or other deferred compensation rights that are not marital property.
  6. Any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services, or lack thereof, as a spouse, parent, wage earner or homemaker.
  7. Any direct or indirect contribution made by one spouse to help educate or develop the career potential of the other spouse.
  8. Any direct contribution to an increase in value of separate property which occurs during the course of the marriage.
  9. The liquid or nonliquid character of all marital property and divisible property.
  10. The difficulty of evaluating any component asset or any interest in a business, corporation or profession, and the economic desirability of retaining such asset or interest, intact and free from any claim or interference by the other party.
  11. The tax consequences to each party.
    • 11A. Acts of either party to maintain, preserve, develop, or expand;  or to waste, neglect, devalue or convert the marital property or divisible property, or both, during the period after separation of the parties and before the time of distribution.
    • 11B. In the event of the death of either party prior to the entry of any order for the distribution of property made pursuant to this subsection:
  12. A. Property passing to the surviving spouse by will or through intestacy due to the death of a spouse.
    B. Property held as tenants by the entirety or as joint tenants with rights of 
survivorship passing to the surviving spouse due to the death of a spouse.

    C. Property passing to the surviving spouse from life insurance, individual retirement accounts, pension or profit-sharing plans, any private or governmental retirement plan or annuity of which the decedent controlled the designation of beneficiary (excluding any benefits under the federal social security system), or any other retirement accounts or contracts, due to the death of a spouse.
    D. The surviving spouse's right to claim an “elective share” pursuant to G.S. 30-3.1 through G.S. 30-33, unless otherwise waived.

  13. Any other factor which the court finds to be just and proper.
Please note it is important that the only marital misconduct that plays a part in equitable distribution is that which wastes marital assets. An affair or other bad behavior would not affect an equitable distribution award, unless a waste of marital assets can be proven.
The courts in North Carolina generally like to do what is called an in-kind distribution. In other words, they like to distribute the items as they are, rather than liquidate or sell the items and just use money. It is therefore important that you list all of the property that is owned as of the date of separation on a Pre-Trial Order form that you will be given.
Information you would need would be listing item in as specific detail as possible, the fair market value of said item on the date of separation, any debt associated with the item on the date of separation, and if you have been separated for a while and there is debt, who has paid the debt and how much. Other debts are equally as important, including credit cards, mortgages, financing on vehicles and anything like that. It is also important to know and keep track of what debts have been paid from the date of separation until you get to trial.
Equitable distribution is subject to mandatory mediation in North Carolina in a proceeding where the parties use a nonpartisan mediator to attempt to resolve all aspects of property distribution..