Equitable Distribution

“Equitable distribution” is the process in North Carolina of dividing property, both assets and debts, that you and your spouse acquired during your marriage. The equitable distribution process requires property to be: (1) classified as marital property, divisible property, or separate property; (2) valued; and (3) distributed to one spouse or the other after consideration of various statutory factors.

There are three “classifications” of property in the context of a separation and divorce – marital property, separate property, and divisible property. Marital property is property acquired by either spouse (or both) during the marriage or before the date of separation, and that is presently owned, except property determined to be separate or divisible property. Property is “presently owned” if owned by either party at the date of separation. Typically, it does not matter in whose name the property is titled or held. Separate property is defined to include property acquired before the marriage, property acquired by gift from a third party during the marriage, property acquired in exchange for separate property, and passive increases in the value of separate property. Property can have a dual classification: part marital and part separate. Divisible property is generally defined to include value changes in marital debt or marital assets occurring post-separation, and includes post-separation increases and decreases in marital debt, and financing charges and interest related to marital debt.

There are two important presumptions which arise under the Equitable Distribution statutes with respect to classification: (1) all property acquired after the date of marriage and before the date of separation is presumed marital (often referred to as the marital property presumption); and (2) all real property creating a tenancy by the entirety acquired after the date of marriage and before the date of separation is presumed marital, and titling property in the entireties gives rise to a presumption of a gift to the marital estate (often referred to as the marital gift presumption or the McClean presumption). Both presumptions are rebuttable by the greater weight of the evidence.

Once property is classified, it must be valued. Marital property and debt are valued as of the date of separation, and divisible property is valued as of the date of the distribution. Value is determined as the net value of the property (fair market value, less debt secured by the property). An appraisal may be needed to determine the fair market value of an asset and as such, it may be necessary to hire experts, such as real estate appraisers or business appraisers, to help you determine the value of your marital property.

Finally, once property is both classified and valued, it must be distributed between spouses. An equal division as to net value of marital and divisible property is mandatory and is presumed equitable unless the court determines in the exercise of its discretion that such a distribution is inequitable. The equitable distribution statute lists various factors that may, if proven, support an unequal division of marital and divisible property. Marital fault or misconduct of the parties not related to the economic condition of the marriage is not relevant to equitable distribution.

The law regarding equitable distribution is both complex and vast. Our attorneys are knowledgeable and experienced – let us help you navigate this often-complicated aspect of your case.