WHAT HAPPENS TO MY STUFF?
- Identification and Classification
The Court first identifies each asset and debt the couple has between them. It then determines whether one or both of the parties has any claim of ownership to each item. Next the Court establishes whether each item belongs to one party or to both. This classification requires support by evidence and substantial facts.
- “Marital property” includes all real and personal property acquired by either spouse from the date of marriage and before the date of separation.
- “Separate property” includes all real and personal property acquired before the marriage date or acquired during the marriage by way of a bequest, gift, or similar accumulation. Other examples of separate property include professional and business licenses which would terminate if transferred, any increase in value to property determined to be separate, or income obtained from such property.
- “Divisible property” is the increase, or decrease, in the value of marital property from the date of separation until the date the property is distributed.
Classification of property can be very nuanced. The Court considers details such as when and how property is acquired when determining its classification. In some instances, items may be classified as both marital and separate. This earns them a dual classification.
After the Court completes its identification and classification of each item, the Court affixes a net value to each piece of property. It bases this amount on the market value of these items at the date of separation, minus anything such as taxes.
Once the Court completes the first two steps in the process, it proceeds to distribute all property “equitably” based on the property’s value and classification. This distribution does not include alimony or child support. The Court will follow an equal distribution of all marital property as outlined in the Equitable Distribution Act, unless it determines that such a distribution would, in fact, be inequitable.
Some reasons for an unequal division of marital property include but are not limited to: length of marriage; support obligations for a previous marriage; necessity of a custodial parent to remain in the marital residence for the benefit of the children; one party’s contributions to the other’s education or career; economic desirability of distributing a business interest to only one party; any acts by one party to maintain or devalue marital property following the separation date; or any other factor deemed just and proper by the Court. Evidence for any of these exceptions must be introduced to the Court at trial. It may only consider exceptions to reasons for which proper evidence is presented.
In case of a concern for the disappearance, waste, or conversion of property, temporary orders or injunctive relief may be obtained with special provisions. You may also ask for a partial distribution of assets prior to the final trial on Equitable Distribution.
The two big exceptions are:
- Your request for Equitable Distribution must be made prior to completion of an Absolute Divorce or any claims on marital property may be lost forever; or
- Some agreements made prior/subsequent to a marital relationship eliminate the option for filing for Equitable Distribution. These may include premarital agreements, postnuptial agreements, or property settlements agreed to at the time of separation. If you agreed to one of these documents then you should consult with a lawyer to discuss your options.
Federal laws may preempt North Carolina laws in these two cases:
- Social Security benefits; or
- Retirement pay previously waived by a service member in favor of veteran’s disability benefits