Property Division

With three exceptions, all assets acquired during the marriage are considered MARITAL PROPERTY, regardless of how acquired or by whom acquired. The three exceptions are: (1) Property acquired by either party before the marriage; (2) Property acquired by either party by inheritance; and (3) Property acquired by gifts specifically to one party. These assets are called SEPARATE PROPERTY and are generally not subject to the Court process known as, equitable distribution, and instead remain the property of the person owning or receiving them.

A division of assets may be made by the parties' Separation Agreement and Property Settlement without court involvement. If the parties cannot agree as to how their assets will be divided then either party may apply at any time after the separation for the Court to divide the assets, known as equitable distribution.  The Courts then divide the "marital property" which was acquired by either spouse during their marriage, regardless of how that asset may be titled.   Generally, the Court considers an equal division to be fair and equitable. However, under certain statutory circumstances, the Court may decide upon an unequal division. The factors, which the Court considers in determining whether to divide the estate unequally, are not related to marital misconduct, but instead are related to financial considerations.

The factors which the Court may consider in deciding whether or not to make an unequal division are:

  1. The income, property, and liabilities of each party at the time the division is to become effective;
  2. Any previous support obligation;
  3. The duration of the marriage, and the age and physical and mental health of both parties;
  4. The need of a parent with custody of child(ren) to occupy the marital residence and use its household effects;
  5. The expectation of nonvested deferred compensation rights;
  6. Any direct or indirect contribution made to the acquisition of property including expenditures, contributions and services, or lack thereof, as a spouse, parent, wage earner or homemaker;
  7. Any direct or indirect contributions made by one spouse to help educate or develop the career potential of the other;
  8. Any direct contribution to an increase in value of separate property which occurs during the marriage;
  9. The liquid or nonliquid character of all marital property;
  10. The difficulty of evaluating any particular type of property;
  11. tax consequences to each party; and
  12. Acts of either party to waste or devalue any marital property, during the period after separation of the parties and before distribution.

Property subject to equitable distribution includes just about everything imaginable; for instance--real estate, retirement and pension accounts, IRA'S, business interests, professional practices, royalties, patents, household furnishings, motor vehicles, jewelry, bank accounts, securities, bonds, savings accounts, debts, liabilities, etc.

The values of the marital assets and the amount of marital liabilities are determined as of the date of separation. The difference between the totals of these two values is the NET MARITAL ESTATE, which is then subject to division.

If the court makes the equitable distribution award, it may be done prior to or after either party obtains a divorce. Equitable distribution by the Court can be an expensive undertaking for the parties. In order to properly present an equitable distribution case to the court, the parties must have reliable evidence as to the value of the property. This often requires the hiring of professional appraisers, actuaries, accountants and other experts who have particular knowledge of the values such as real estate, pension plans, businesses, professional practices, etc. It is often advisable to obtain appraisals of those assets, which neither party is able to value realistically even if the parties are able to resolve their differences out of Court.

Equitable distribution is a separate issue from alimony; however, if alimony is involved, the Court may review the alimony determination after it makes a division of assets under equitable distribution law. Child custody and child support are, for the most part, unrelated to equitable distribution.

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Gabriela J. Matthews
& Associates, P.A.
100 E. Parrish St., Suite 400
Durham, NC 27701

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