Property Division in North Carolina

When a married couple decides to proceed with the dissolution of their legal partnership, there is a multitude of matters that the court may have to settle. One of these matters is the issue of property division. Property division processes are carried out so that the property that was acquired and shared by both spouses throughout the duration of a marriage is divided in a way that is fair and impartial. Within a marriage, most couples don't even think about who owns respective pieces of property until they start thinking about separating or divorcing. For this reason, property division can seem like one of the most overwhelming and stressful aspects of a divorce.

In these circumstances, it's important that parties are aware of their state's legal principles and guidelines when handling the division of property in a marriage. Understanding how local courts handle and mitigate property division cases can ease the minds of the parties involved. Also, having a knowledgeable advocate on your side who is well acquainted with the complexities of state property division law can considerably affect the outcome of a case. Below is an overview of property division law and process in the state of North Carolina.

North Carolina Property Division Law

In each state, there are guidelines that courts must adhere to when legally dividing property among spouses. Depending on the state where the couple resides, there are two standards that are commonly used by courts in this process: community property and equitable distribution.

Community Property

As of now, nine states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) abide by community property law. Courts located in these states split a couple's assets down the middle during a divorce without assessing the circumstances of the marriage. Under this law, factors that determine whether it would be fair to divide or distribute property are irrelevant.

Equitable Distribution

On the other hand, the remaining majority of states follow the equitable distribution legal standard. In these cases, a judge's discretion, which is ultimately based on the individualized circumstances of a marriage, determines how property will be fairly divided.

North Carolina is among the states that adhere to equitable distribution laws. This means that a court is granted the opportunity to modify the traditional fifty-fifty division of assets if a party believes that this effort would be fair. However, in order to determine how property will be divided, one must consider (1) the category that assets fall under; and (2) the factors that influence the process of property division.

Property Classifications

Out of all of the divorce-related matters handled by the courts, property division is one of the most lengthy. The court has to dedicate time to discover and document all of the property owned by both spouses, dictate the property's value, and then put it into one of three classifications to determine whether it will be divided. The following classifications are used to categorize property in a case:

Marital property: All of the possessions and assets that are acquired by spouses during a marriage is considered marital property. However, a court may label properties received in a marriage as a “separate property” if it has certain characteristics.

Separate property: This type of property is acquired before a marriage, or during the marriage as a gift or inheritance from an outside party. The possibility of an asset or debt being listed as a separate property is important in the property division process. If a court dictates that a possession is a separate property, the spouse that the court determines owns it will typically get to keep the complete property for themselves after a divorce.

Divisible property: Any of the couple's assets that either depreciates or appreciates in value after the date of separation is known as divisible property. Any type of income earned from marital property is also categorized as divisible property. Examples of this form of property are real estate and stock investments.

Oftentimes, the court treats divisible property and marital property similarly when determining how possessions will be split. Nevertheless, when a court deals with divisible property, it uses the value of the assets as they were on the date of separation as a reference point in making a decision. In the event that the divisible property has appreciated, the new income will be considered as a separate asset.

The Property Division Process in North Carolina

Unlike community property states, the courts in equitable distribution states have total discretion over how marital property will be divided. This means that the range of possibilities are broad when it comes to which spouse will get what property at the end of a proceeding. The court's decision, however, is guided a number of equitable distribution factors that are found in North Carolina statutes, and these factors are:

  • The income, property, and liabilities of each party at the time the division of property is to become effective;
  • Any obligation for support from a prior marriage;
  • The duration of the marriage;
  • The physical and mental health of both spouses;
  • The needs of a parent with custody of a child or children to occupy a marital residence;
  • Reasonable expectations of a pension, retirement or other compensation rights that are not deemed marital property;
  • Direct or indirect contributions made by one spouse to help the career potential of another spouse;
  • Debt accrued by each party; and, among other factors,
  • Any direct or indirect contribution to an increase in value of separate property that occurs during the course of marriage.

It's important to note that marital fault is a completely irrelevant factor in an equitable distribution proceeding. A spouse's misconduct will only be referenced if it affected the couple's marital estate.

Experienced Family Law Attorneys

Any divorce is difficult. Having to mitigate related matters such as property division in courts can make the experience more stressful. Due to North Carolina's equitable distribution law, it is in your best interest to consult with an experienced attorney. With the help of a legal professional, you'll be able to weigh your options and maximize the outcome of a favorable outcome. Contact the attorneys at Caulder & Valentine Law Firm, PLLC today for a consultation.