When a married couple chooses to dissolve their marriage, there are a number of issues that the court may need to resolve. One of these is the question of property division. The process of property division is designed to ensure that the property that has been owned and shared by both partners throughout the course of the marriage is distributed in a manner that is equitable and fair. During a marriage, many couples do not even consider who owns which property until they begin to contemplate separation or divorce. Consequently, property division can appear to be one of the most challenging and distressing aspects of a divorce.
In such cases, it is essential for parties to be aware of the applicable laws and regulations in their respective states when it comes to the division of marital assets. Knowing the local court's approach to property division can be beneficial to both parties, as it can reduce the stress associated with the case. Additionally, having an experienced attorney who is well-versed in the intricacies of state law regarding property division can have a significant impact on the outcome of the case. This article provides an overview of the property division laws and procedures in North Carolina.
North Carolina Property Division Law
In order to legally divide property between spouses, courts in each state must adhere to certain criteria. Depending on which state the couple lives in, courts typically use two criteria to determine the division of property: Community property and equitable distribution.
Community Property
Currently, there are nine states that use community property law: Arizona; California; Idaho; Louisiana; Nevada; New Mexico; Texas; Washington; and Wisconsin.
Community property law allows courts in these states to split a couple's assets in half during a divorce, regardless of the facts surrounding the marriage. In the context of community property law, the factors that would determine whether or not property should be divided or distributed are irrelevant.
Equitable Distribution
In contrast, the majority of states adhere to the equitable distribution legal framework. In such cases, the division of property is determined by the discretion of the judge, which is contingent upon the particular circumstances of the marriage.
In North Carolina, equitable distribution laws are in place, meaning that a court has the authority to alter the traditional 50-50 distribution of assets if the court deems it appropriate to do so. To determine the manner in which property is distributed, it is necessary to consider the category of assets that are included in the division, as well as the factors that affect the process of dividing property.
Property Classifications
Divorce proceedings can be drawn out for an extended period of time, particularly when it comes to property division. The court must take the time to identify and document all assets owned by both parties, determine the value of the assets, and assign them to one of three categories to determine if they will be partitioned. The following categories are used to classify assets in a divorce case:
Marital property: All of the possessions and assets that are acquired by spouses during a marriage is considered marital property. However, a court may label properties received in a marriage as a “separate property” if it has certain characteristics.
Separate property: This type of property is acquired before a marriage, or during the marriage as a gift or inheritance from an outside party. The possibility of an asset or debt being listed as a separate property is important in the property division process. If a court dictates that a possession is a separate property, the spouse that the court determines owns it will typically get to keep the complete property for themselves after a divorce.
Divisible property: Any of the couple's assets that either depreciates or appreciates in value after the date of separation is known as divisible property. Any type of income earned from marital property is also categorized as divisible property. Examples of this form of property are real estate and stock investments.
Oftentimes, the court treats divisible property and marital property similarly when determining how possessions will be split. Nevertheless, when a court deals with divisible property, it uses the value of the assets as they were on the date of separation as a reference point in making a decision. In the event that the divisible property has appreciated, the new income will be considered as a separate asset.
The Property Division Process in North Carolina
Unlike in community property states, in equitable distribution states, the courts have complete control over how marital property is distributed. As a result, there is a wide variety of options when it comes to determining which spouse will receive which property at the conclusion of a proceeding.
However, the court's decision is based on a variety of equitable distribution factors found in the North Carolina statutes. These factors include:
- The income, property, and liabilities of each party at the time the division of property is to become effective;
- Any obligation for support from a prior marriage;
- The duration of the marriage;
- The physical and mental health of both spouses;
- The needs of a parent with custody of a child or children to occupy a marital residence;
- Reasonable expectations of a pension, retirement or other compensation rights that are not deemed marital property;
- Direct or indirect contributions made by one spouse to help the career potential of another spouse;
- Debt accrued by each party; and, among other factors,
- Any direct or indirect contribution to an increase in value of separate property that occurs during the course of marriage.
It's important to note that marital fault is a completely irrelevant factor in an equitable distribution proceeding. A spouse's misconduct will only be referenced if it affected the couple's marital estate.
Experienced Family Law Attorneys
Divorce can be a challenging process, particularly when it involves dealing with complex legal issues such as property division. In North Carolina, equitable distribution law can make the process of divorce even more stressful, so it is important to seek the counsel of an experienced attorney to help you evaluate your options and ensure the best possible outcome. Contact Webster & Back Law today for a consultation.