Equitable distribution is the process of dividing assets and debts accumulated during a marriage. The process involves four steps: identification, classification, valuation, and distribution.
Identification requires each party to list all assets and debts whether in one spouse’s or both spouse’s names. This includes property owned with third parties. Assets include real property, bank accounts, investment accounts, retirement accounts, brokerage accounts, stocks, bonds, mutual funds, automobiles, boats, trailers, IRA account, 401K accounts, business interests, life insurance policies, and any individual property valued at $500 or greater such as furniture, jewelry, artwork, and tools. Debts includes mortgages, credit cards, car loans, personal loans, student loans, and care credit accounts. If in doubt, disclose everything to your KYA law attorney.
Classifying Your Assets & Property
Classification is the process of determining the type of property for purposes of equitable distribution. Property is either marital, separate, divisible, or mixed property. The classification determines how the property is treated when dividing the couple’s assets.
Different Types of Property
- Marital property is all property acquired by either or both spouses during the marriage, prior to the date of separation that does not fall under the definition of separate or divisible property. The presumption is that all property acquired during the marriage is marital property unless proven otherwise.
- Separate property is real or personal property that either spouse owned prior to the marriage or inherited or received as a gift during the marriage.
- Property is classified as divisible under several circumstances. The most common examples of divisible property are the change in value of property and passive income such as interest and dividends from marital property after the date of separation but before final distribution.
- Mixed property has characteristics of two of more classifications. An example would be a home that was in the wife’s name prior to marriage. After marriage, the home is still classified as her separate property. However, if marital funds are then used to make mortgage payments, the increase in value would be marital property.
What Factors Does The Court Consider When Determining Equitable Distribution?
In North Carolina, the court considers a few factors to ensure that marital property is divided fairly:
- Duration of the Marriage: Longer marriages may lead to a more equal distribution of property.
- Prenuptial or Postnuptial Agreements: If a valid prenuptial or postnuptial agreement exists, the court will review its terms and consider its impact on property division.
- Income and Earning Potential: The income and earning potential of each spouse, including their education, skills, and future earning capacity are all assessed.
- Contributions to the Marriage: The court considers the contributions made by each spouse to the acquisition, preservation, or appreciation of marital property. This includes financial contributions, homemaking, childcare, and support of the other spouse's career or education.
- Standard of Living: The court aims to preserve this as much as possible for both of the parties.
- Age and Health of Each Spouse: The age, physical health, and mental well-being of each spouse are taken into consideration to ensure a fair distribution that takes into account their respective needs.
- Any Wasteful Dissipation of Assets: If one spouse has wasted marital assets through excessive spending, gambling, or other means, it may affect the way property is divided.
- Debts and Liabilities
- Tax Consequences
- Other Relevant Factors: The court has the discretion to consider any other relevant factors that may impact the equitable distribution of marital property.
If you require guidance regarding equitable distribution in NC, it is advisable to seek the assistance of a knowledgeable Charlotte equitable distribution lawyer. By working with a seasoned attorney, you can expect dedicated sound counsel and representation backed by years of experience. At Law Office of Kelli Y. Allen, PLLC, we go the extra mile to ensure you get personalized attention and effective advocacy in your property division case. With our years of experience in family law and commitment to client satisfaction, we are ready to assist you in achieving a fair and equitable distribution of marital property. Speak with an equitable distribution attorney in Charlotte today.
Determining Fair Market Value
After all property and debts are identified and classified, the next step is to determine the fair market value for each item as of the date of separation. This may require the use of one or more appraisals. If the parties cannot agree on the value and cannot agree on an appraiser, the court may appoint an appropriate professional to conduct the valuation. Usually these fees are split equally between the parties. Appraisals are frequently required for valuation of real property and business interests.
The final step is property and debt distribution. Prior to a judge undertaking this task, the parties will be ordered to participate in Family Financial Mediation. During this process, you and your attorney will meet with a NC Certified Family Financial mediator who will attempt to help the parties reach their own property distribution agreement. Our lead attorney, Kelli Allen, is certified to conduct Family Financial Mediation and can offer particular insight into the mediation process.
If the parties are unable to agree on the division of property, the judge will determine which spouse shall have ownership of each asset and assume responsibility for each debt. This is based on the principle of “fairness”. In North Carolina, the presumption is that an equal distribution is a fair distribution. However, either party may request that the court make an unequal distribution if he or she can demonstrate that the only way to obtain a fair result is through an unequal distribution of property. The factors used to determine whether a deviation is proper are found in North Carolina General Statute 50-20 and include:
- The income, property, and liabilities of each party at the time the division of property is to become effective.
- Any support obligation from a prior marriage.
- The duration of the marriage
- The age and physical and mental health of both parties.
- The need of a parent with custody of a child or children of the marriage to occupy or own the marital residence and to use or own its household effects.
- The expectation of pension, retirement, or other deferred compensation rights that are not marital property.
- Any contribution made by one spouse to help educate or develop the career potential of the other spouse.
- Any direct contribution to an increase in value of separate property which occurs during the course of the marriage.
- Whether the property is liquid.
- The tax consequences to each party.
- Acts of either party to maintain, preserve, develop, or expand; or to waste, neglect, or devalue property, during the period after separation of the parties and before the time of distribution.
Do You Require Legal Representation in a Divorce Case?
Contact the Charlotte divorce lawyer at the Law Office of Kelli Y. Allen, PLLC if you have questions about equitable division or need to negotiate a fair marital settlement agreement. Our attorney can evaluate your separate and marital assets, identify your priorities, and develop a plan that achieves the most beneficial property distribution.
Contact the Law Office of Kelli Y. Allen, PLLC at (704) 870-0340 to schedule a consultation today.
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