What Will a Divorce Judge Take Into Consideration in Dividing Marital Property?

North Carolina, like most states, uses a system of equitable distribution when it comes to dividing assets from a divorce proceeding. Unlike the minority of states that use a community property regime that simply splits everything down the middle, equitable distribution looks at what would be a fair division of assets. Although there is a presumption that an equitable distribution will be equal, this can be overcome in many different circumstances if a 50-50 split would be unfair to one of the parties. This can occur in many different circumstances, but some common examples are when:

• One spouse put their career on hold to raise a child or children from the marriage
• One spouse has primary custody of a child or children from the marriage
• One spouse made substantially larger contributions to the marital household throughout the course of the marriage

What Counts as Marital Property?

Property that one or both spouses acquired during the marriage and still owned on the date of separation is generally considered marital property that is subject to equitable distribution in divorce in North Carolina.

First Steps in Deciding how to Divide Property

A dividing couple can negotiate a valid separation agreement at the time of separation laying out how they will divide their shared property. Otherwise, they can attempt to reach a settlement agreement about the issue through mediation. This agreement can be presented to the courts during the divorce proceeding and can greatly reduce the time and cost associated with a divorce case. However, if the settlement agreement is grossly unfair to one of the parties, or if the parties could not reach a consensual settlement agreement through mediation, the court can rule on what would be an equitable distribution.

Equitable Distribution Factors

The North Carolina legislature has laid out a number different factors that a court must consider when calculating what would be a fair distribution of assets in divorce, along with a catch-all inclusion of “any other factor” the court finds to be fair and proper.

A court must take the following factors into account in determining what will be a fair distribution of property in divorce:

1. Each party’s income, liabilities and property at the time the division will become effective
2. Any support obligations of either party from a previous marriage
3. Each party’s age and physical and mental health, and the duration of the marriage
4. The custodial parent’s need to use or own the marital residence or household effects
5. The expectation of retirement, pension and other deferred compensation rights that are not marital property
6. Any contributions to marital property by the party whose name is not on the title. This includes contributions and expenditures, or the lack thereof, by the spouse as a wage earner, homemaker or parent.
7. Any direct or indirect contributions one spouse made to help develop the other spouse’s education or career potential
8. Any direct contributions over the course of the marriage to an increase in the value of a property one of the spouses owns separately
9. The liquidity of all the marital and divisible property. Liquid property is that which can be easily converted to cash.
10. How difficult it will be to evaluate any of the couple’s jointly-held business interests, and the “economic desirability” of keeping that interest free and clear from any interference or claim by one of the parties
11. Federal and state tax consequences that are reasonably likely to occur to either party
12. Any acts by either party to develop, preserve, expand; or devalue, convert, waste or neglect the marital or divisible property during the period of separation before distribution
13. If either party dies before the judge grants an order concerning the distribution of property, the court will also consider:
    1. Property that is passing to the surviving spouse through will or intestacy because of the other spouse’s death
    2. Tenant property rights that will pass to the surviving spouse
    3. Property the surviving spouse will receive from the deceased’s life insurance, pension, IRA, private or government retirement plan, or any other retirement account or contract
    4. The surviving spouse’s right by law to any shares or allowances from the deceased’s net assets

If you are facing a divorce, it is extremely important to have the help of an experienced family law attorney to and represent your interests throughout the complicated and adversarial process. Trying to scrimp on solid legal representation in a divorce can cost you immeasurably more in the long run. Arnold & Smith, PLLC has a dedicated and experienced team of family law attorneys including several Board-Certified family law attorneys based in Charlotte, Mooresville, Monroe and serving the surrounding areas. Contact us today to speak with one of our family law attorneys about your case.

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