North Carolina is an “equitable distribution” state, as opposed to “community property” state. In other words, property acquired during the marriage is subject to being divided fairly between the two parties upon dissolution of the marriage. Keep in mind that “fairly” does not always mean “equally” in this context.
When facing a separation, and you and your spouse own property together (either a house, cars, a business, investments, etc), the division is based on how the shared property is classified: it will either be considered “marital” (subject to division, bought during the marriage), separate (you or your spouse owned it on your own before the marriage) or divisible (acquired after your separated but you are still married).
Marital property includes all property acquired by either of you during the marriage, regardless of who holds legal title to the property. Subject to division
Separate property includes property acquired by either spouse prior to the marriage or property that is inherited or gifted to one spouse during the marriage. Not subject to division.
Divisible property includes property accumulated by either spouse during the marriage but after the date of separation.
The date of marriage and the date of separation are especially important with regard to equitably distribution because those dates are used to delineate which property is considered marital property and which property is considered separate property. Property distribution can be a complex issue, and it is important to consult with a family law attorney to ensure that your rights are protected.
“Fault” is not a factor
Unlike post-separation support or alimony, the Court does not consider any incidents of misconduct or infidelity when determining the distribution of property.
Your debt is also shared
When you are looking at the balance sheet of your assets during a marriage, it is easy to overlook the marital debts you acquired together, because those also must be divided equitably between you.
Court is not mandatory
Just because you are facing this legal dismantling of your marriage, it does not automatically mean that you and your ex are in a hostile or adversary position. Those kinds of cases make headlines (see Kelly Clarkson), but the majority of cases are settled without having to ever see the inside of a courtroom. There are many avenues for clarifying what you both agree to and how to divide your property, and if you put all the details in a separation agreement, this clears the way for a simple, Absolute Divorce to be filed without fanfare after your year of separation. We can help explain this process to you since not only do we walk our clients through it, but we have gone through it ourselves.
FAQs on Equitable Distribution in North Carolina
Does filing for the divorce first affect the equitable distribution of assets?
No, the laws surrounding property division in North Carolina are designed to be fair and equal, regardless of who files for divorce first. As such, couples should not let this issue deter them from beginning the separation and divorce process. With the help of experienced attorneys, you can ensure that your property is divided fairly and in accordance with the law.
Are any taxes on the inherited property separate property in North Carolina?
Inherited property can be a contentious issue in divorce proceedings, as each spouse may claim that the property is separate and should not be subject to division. In North Carolina, inherited property is generally considered to be separate property, and as such, it is not subject to division in a divorce. However, there are some exceptions to this rule. For example, if the property was acquired during the marriage or if it has been commingled with other marital assets, it may be classified as marital property. As such, it is important to consult with an experienced divorce attorney to determine how your inherited property will be classified in a divorce.
We have a contract with the owner and are paying our house off to him. When the payments are done, he will give us the deed, but that won't be for another five years. How do we divide that?
This is called a “Contract for Deed” and is a slightly more complicated situation, since technically the owner of the house is neither you NOR your spouse, but this 3rd party. However, you may have an equitable claim in the house and can work out how to divide it from there. This is something we have experience doing and can help explain the process.
My partner and I never believed in traditional marriage but we have lived in our house for 15 years -- isn't that common law marriage? Can I get half the house?
North Carolina does not recognize common law marriage, so if you purchased a house together as an unmarried couple, you would divide the house as tenants in common, not as tenants by the entirety. Equitable Distribution does not apply.