North Carolina Equitable Distribution FAQ’s
- What is equitable distribution?
- How is equitable distribution handled in North Carolina?
- What does ‘property’ mean when talking about equitable distribution?
- What is considered marital property?
- What is considered separate property?
- Who decides how our property is divided?
- Is it always a 50/50 split? What factors does a court consider when making an equitable distribution ruling?
- Does fault (like one spouse caught cheating) affect the division of marital property?
- When can I file for equitable distribution and when is it settled?
- Can I get a divorce even if we haven’t come to an agreement over equitable distribution?
- Can I get a temporary order to protect my assets?
- Are pension plans and retirement plans subject to equitable distribution?
Equitable distribution is the process of dividing the property and debts of a marriage.
There are 3 steps to the process.
The first is identification. All property must be identified as either marital or separate property according to the law.
The second step is valuation. All marital property must be assigned a fair market value. Fair market value means the price a willing buyer would pay a willing seller for the property. Often, experts and appraisers will help with this step. Valuation is based on the amount the property is worth at the time of separation.
The third step is distribution. The courts will distribute the marital property in a fair and equitable manner. In North Carolina, this usually means a 50/50 split between spouses, unless the courts determines that such a split would be inequitable.
Equitable distribution is not automatic. You must assert your right to ED, either through an agreement with your spouse, or through the court system. It is a separate action, apart from the actual divorce decree.
Property includes both assets and debts of the marriage. All assets and debts acquired during the marriage, and still held at the date of separation, are included and used to determine the net value of the marital property. The property could have a negative net value if the debts are greater than the assets.
Marital property consists of all real and personal property acquired by either spouse during the time of their marriage, and still owned at the date of separation. This could also include assets that were liquidated just prior to separation if the assets were unjustifiably seized without accounting for it.
Separate property is all real and personal property acquired prior to the marriage. It also includes any property which is gifted to a spouse by a third party (not by their spouse), or property that is inherited, regardless of whether it was received during the marriage or prior to the marriage.
If you and your spouse can come to an agreement, you can divide the property yourselves through an agreement. If you can’t agree, you will have to go to court and a judge will decide the matter. There will be a lapse of time between separating and when you receive a court date. During that time, the person with possession of the property may be able to use that property, unless an order is given by a judge barring them from doing so.
- Is it always a 50/50 split? What factors does a court consider when making an equitable distribution ruling?
Most judges favor a 50/50 split as the most fair and equitable means of distributing property. However, the courts do consider several different factors when determining fair and equitable distribution. These include, but are not limited to:
- Length of the marriage
- The need of the parent with primary custody of the children to maintain residence in the family home
- Age and health of the parties
- The unequal earning power of the parties
- Support obligations from a previous marriage
- A party’s contribution to any property acquired
- A party’s direct contribution to the increase in value of the other party’s separate property
- The presence of pension or retirement benefits
- Contributions made by one spouse to further the educational or career development of the other
- The financial situation of each party at the time of separation
- Any acts made to devalue marital property after the date of separation
No, unless the misconduct had an effect on the economic well being of the marital estate.
You can file at any point after the separation, either as a separate order or combined with other actions. The judge may rule on the motion either before, during or after your divorce is finalized. If you and your spouse have come to an agreement, the action can be finalized prior to the divorce.
Yes. Provided you’ve started a motion for equitable distribution prior to the divorce decree, you are still protected under the law and will eventually get equitable distribution. If, however, you get a divorce and have no motion for equitable distribution currently before the court, then your right to equitable distribution is terminated when your divorce is finalized.
Yes, it’s called an injunctive relief. This type of temporary order is meant to prevent the disappearance, conversion or waste of property that is alleged to be either marital or separate. Injunctive relief can be given before or after an ED action has been started.
Temporary orders may also be used to partially distribute marital property. This type of order may not be filed until after an ED action has been filed with the court.
Yes, and it’s an area many people don’t think about. In order to get your share of a pension plan, you must get an order called a Qualified Domestic Relations Order. Simply stating in your separation agreement or divorce decree that you’re entitled to a part of your spouse’s pension is not sufficient. You must have a QDRO signed by a judge. Otherwise, the administrator of the plan will not pay you anything.
You do not need a QDRO for non-qualified plans, such as an annuity or IRA (Individual Retirement Account).
