For many couples, dividing their assets and debts is one of the most difficult, confusing, and stressful parts of a divorce. Before you panic about losing your home, car, and family heirlooms, keep reading. In this article, we’ll answer five frequently asked questions about North Carolina property division that will help you understand the process and what’s involved.
1. What Does Equitable Distribution Mean in a Divorce Case?
Equitable distribution is the process of dividing marital and divisible property in court. In a perfect world, you and your spouse would negotiate the division of your marital property without a judge’s involvement. Of course, most spouses don’t divorce if they’re finding it easy to cooperate. If you can’t come to an agreement (which is not out of the ordinary), the court will schedule a hearing and divide your marital property using a theory of equitable distribution. Marital property includes both assets and debts.
Based on this theory, a judge will split your property 50-50 unless such a split would be inequitable or unfair. When a judge assesses the fairness of a split, they consider a series of factors, some of which are:
- Each spouse’s income, debts, and property
- How long the marriage lasted and each spouse’s age
- Ways in which a spouse directly or indirectly contributed to the other’s educational and professional opportunities
- A custodial parent’s need to occupy or own the marital home or other household items
- Both spouses’ physical and mental health
- Tax consequences related to the property division
- Any other factors that are “just and proper”
Note that the court will not consider child support and alimony payments when dividing marital property.
2. What Is Marital Property and How Much Is It Worth?
For the purposes of property division, courts classify property into three categories:
This category includes any income, assets, property, and debts that you accumulated during the marriage. Marital property can include wages, pension and retirement funds, investment accounts, real estate, personal property, mortgages, car loans, and credit card bills.
Your spouse typically does not get a share of your separate property, which includes your pre-marriage assets and debts as well as gifts or inheritances that someone specifically gave to one spouse and not the other.
It’s important to note that separate property can transform into marital property if you commingle it, meaning mix it with marital assets. For example, if you use an inheritance to buy a jointly-titled asset, it might become marital property. If your spouse is trying to claim a share of your separate property, you should contact a lawyer immediately.
RELATED ARTICLE: How to Protect Gifts and Inheritances in a Divorce
There’s always some time that passes between when spouses separate and when the court gets around to handling property distribution, and this category exists to deal with assets that the spouses receive during that period as well as assets that change in value during that period. Note that an asset that was earned before the date of separation will still count as divisible property if it’s received after separation.
Once you identify your marital and divisible property, you need to determine its value. Early on in your divorce, both spouses will need to complete an affidavit of equitable distribution that outlines their assets and the fair-market value of those assets as well as any debts. While some values are easy to set, valuing complicated assets like small businesses may require help from an expert.
To decide the value of items in an equitable distribution case, the judge will refer to the fair market value. The law defines fair market value as the price that a willing buyer would pay a willing seller for the item in question when neither is under a compulsion to buy or sell the property. The fair market value doesn’t mean what was paid for a specific item when it was initially bought five years ago (purchase price), nor does it mean the price someone would pay if they went out and bought the item new (replacement value).
3. Can a Prenuptial Agreement Protect My Assets?
Nuptial agreements can occur either before (prenuptial) or during a marriage (postnuptial). In a nuptial agreement, you and your spouse define which property is marital and which is separate. This can streamline your property division process if you divorce.
However, not every nuptial agreement is valid. You can dispute the validity of a nuptial agreement if you didn’t enter it voluntarily, if it was based on fraud or misrepresentations, or if it wasn’t properly signed.
RELATED ARTICLE: How Do Prenuptial and Postnuptial Agreements Affect Divorce?
Even if you don’t have a nuptial agreement, you can still negotiate a separation agreement, which is an out-of-court property settlement that divides marital and divisible property and identifies separate property. A separation agreement can also resolve child custody and support issues. However, keep in mind that once you enter a separation agreement, it will become legally binding and won’t be easy to change. You should always get advice from a lawyer before you enter a separation agreement.
4. Who Gets to Stay in Our House?
If you have minor or dependent children, the parent who has primary physical custody may get to stay in the marital home. However, that spouse will need to consider whether they can afford to pay the remaining mortgage and other costs before trying to stay in the house. Sometimes, the best option for both parties is to sell the marital home and divide the proceeds.
5. My Spouse’s Behavior Caused Our Divorce — Does That Impact Their Property Share?
Typically, North Carolina courts don’t consider fault when they divide your marital property. You won’t get a bigger share of property or get to keep the house because your spouse cheated on you, as an example.
However, your spouse’s misconduct might affect alimony and spousal support. For instance, North Carolina courts typically won’t grant alimony to a spouse who engaged in illicit sexual behavior (meaning they cheated or had an affair) during the marriage.
RELATED ARTICLE: How Does Alimony Work in North Carolina?
Myers Law Firm: Experienced Divorce Lawyers for Clients in Charlotte and Mecklenburg County
If you’re considering a separation or your spouse recently filed for divorce, you need to understand your legal options. At Myers Law Firm, our respected divorce lawyers can help guide you through difficult family law issues with compassion and make sure your rights are protected. To schedule your initial consultation, fill out our quick and easy online contact form or call us at 888-376-2889. We’re here if you need help.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.