Asset Division and Marital Property
The divorce process is designed to fairly value and distribute marital assets, and address other financial implications including child support and alimony. Many matters are resolved through effective negotiation and agreements between husbands and wives. However, when matters cannot be amicably resolved, litigation becomes a necessary part of divorce. Divorce has many personal and financial challenges, but with a clear understanding of the law and your options, you will be able to make informed decisions that address your needs – now and in the future.
Marital property is defined as all assets acquired during the marriage and prior to separation (with certain exceptions). Debt can also be marital property and subject to division. All marital property is subject to distribution between the marital partners. Many couples resolve asset division without court intervention by developing a property settlement agreement. However, if spouses cannot agree on the issue of property distribution, then it becomes necessary for the court to intervene. North Carolina’s “Equitable Distribution of Marital Assets” statutes empower the court to divide all marital assets (including real and personal property) and debts. It is important to note that the rights to equitable distribution are not automatic and must be specifically claimed by one or both spouses.
Equitable distribution is basically a three step process that can take place prior to the final divorce decree or after (if you have preserved your rights by filing your claim before the the divorce judgment):
- Identification and Classification recognizes and categorizes property as marital and or separate. Separate property is owned prior to marriage, or inherited property or gifts. In a number of situations, a dual classification of a property item may occur.
- Valuation assigns a fair market value to each property item. Fair market value is the amount that a willing buyer would pay a willing seller.
- Distribution of the marital property is equally divided between parties, unless facts demonstrate that equal distribution would be unfair.
There are several factors that the court considers in equitable distribution of assets, including: income, debt, property of each spouse; prior marital support obligations; duration of the marriage; age and health of each partner; needs of the custodial parent; contributions of one spouse to the education of another; and retirement and pensions. To ensure the preservation of assets until equitable distribution, the court may enter an injunction to prevent the transfer, depletion or hiding of assets.
Divorce is an emotionally draining process where spouses are sometimes competing for financial resources. A number of spouses agree to the division of their assets and are divorced without ever understanding what they’ve given up. Many partners accept financial terms in the hopes of expediting the divorce process, only to find themselves in financial crisis sometime in the future. It is important to understand there may be hidden assets and assess the “real” value of the marital estate and business interests. Divorcing spouses are typically unprepared to objectively consider settlement offers, counter offers and other complexities associated with different types of investments.
You can protect yourself by collecting as much financial information as possible, including bank accounts, stock options, deferred compensation plans, real estate, brokerage accounts, foreign accounts, offshore trusts and deferred tax planning devices that can be difficult to sort out and assess. If you and your spouse are in litigation over equitable distribution, your attorney has the ability to discover your spouse’s assets.
Understanding the comprehensive picture of your marital finances is critical to negotiating the best possible financial terms and standard of living. If you believe that your spouse may be transferring joint assets out of your name, hiding assets, or if your spouse has hired a lawyer, it is especially important that you have expert legal representation.
Frequently Asked Questions
Although the actual property distribution judgment (court ruling) can occur after the divorce, any claim for an equitable distribution of property must be made before the absolute divorce is granted. That makes it extremely important to contact a Raleigh divorce lawyer right away if you are planning to obtain a divorce. Failure to act now could mean you forfeit your right to a say in how marital property is divided.
First, it’s important to establish what is meant by “marital property”. The definition of this term, found under § 50-20 of the North Carolina General Statutes, is “all real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of the separation of the parties, and presently owned, except property to be determined as separate property.”
By statute, property means not only the marital home and other physical property, but also financial assets such as pensions and retirement. Any piece of marital property, however, may be rebutted as “separate” (not marital), by a preponderance of evidence. Separate property includes property acquired prior to marriage as well as gifts and inheritances. The court may ultimately decide which property is marital and which is separate.
Marital property, furthermore, also includes debts acquired during marriage and owned at the time of separation. If your spouse has significant debt that you do not want to be burdened with after divorce, you may prefer an unequal distribution.
Actually, equitable distribution is not automatic. It must be asserted by one (or both) parties. Depending on the assets and debts held by each party, unequal distribution might be in your favor. Left to the court, more than a dozen “equitable distribution factors” come into play when a judge believes that a non-50/50 split of marital property is fair. You can also agree to a 60/40, 70/30, or any other split of marital assets and debts (even 95/5) in a negotiated settlement.
Whether you prefer to make a claim for equitable distribution or you believe that such an arrangement is not in your favor, a North Carolina divorce lawyer can inform you of all your legal rights and options.
No – and we can’t stress that answer enough. Any claim you file for equitable distribution of your property must be made before the absolute divorce is granted. There are many reasons why this is important.
As a spouse, you are entitled to an “equitable” share of all marital property. Generally speaking, this is any property that either you or your spouse obtained after the date of marriage and before the date of the filing for divorce.
If the spouses can agree on the division of marital assets and debts, they can enter into a separation agreement, or what is sometimes called a “divorce settlement.” However, you will need to file for equitable distribution of property by the court if no agreement can be reached.
Additionally, you may want to file for an injunction that will prevent a spouse from tampering with marital property or an order that temporarily divides property such as a joint bank account before the final equitable distribution decree or settlement agreement is final.