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Five Frequently Asked Questions About North Carolina Property Division

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:

Marital Property
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.

Separate Property
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

Divisible Property
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?

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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.

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Equitable Distribution

Going through a divorce is an emotionally straining and frustrating experience that affects many aspects of your life. As you go through your married life, you accumulate assets together, like bank and retirement accounts, car titles, and mortgages. When the decision to end the marriage occurs, those assets must be divided.

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Property After Divorce

No one gets married expecting to later divorce, which means that they usually don’t give much thought to who owns what property in the marriage unless a divorce becomes inevitable. When the unfortunate happens and the prospect of separation begins to loom, the process of sorting out the tangle of shared property can suddenly seem frustrating and even overwhelming.

In these situations, learning about the legal principles courts use to divide marital property during a divorce can clear up some of the confusion and help you understand what to expect. To help, we’ve composed a quick guide to the legal logic behind property division during a divorce.

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North Carolina General Assembly

This is Part 1 of a recent article that I wrote regarding recent laws passed by the North Carolina General Assembly which affect family law and divorce issues.  Part 2 will be coming soon.

The recent legislative session of the North Carolina General Assembly was notable for many reasons and brought a lot of attention to the State of North Carolina.  While one high profile bill that was passed in the area of family law garnered a good bit of national attention, there were several others that could significantly impact family law practitioners.  The following is a summary of new laws that were enacted during the long session of the 2013 General Assembly that may impact you in your representation of domestic clients.

Uniform Deployed Parents Custody and Visitation Act

One comprehensive piece of legislation was the adoption of the Uniform Deployed Parents Custody and Visitation Act .  This law amends N.C.G.S. §§ 50-13.2 and 50-13.7A, and creates a new Article 3 in Chapter 50A.  This law became effective October 1, 2013.

The first section of the new law amends N.C.G.S. § 50-13.2 by adding a new subsection (f).  This new subsection prohibits a court that is making a custody determination from considering past military deployment or possible future deployment as the only basis in determining what is in the child’s best interest (emphasis added).  The new subsection does allow the court to consider past or possible future deployment that has any significant impact on the best interest of the child.  In practical terms, the result is that the court cannot use past or future deployments as the only basis for a custody decision, but may use it as one of several factors.  Furthermore, if the past or future deployments have a significant impact on the child’s best interest the factor may be weighed more heavily.

The second section of the new law repeals § 50-13.7A.  These were the previous provisions regarding custody and visitation for military members.  These provisions are replaced by the much more comprehensive provisions in section three of the law.

Section 3 of the law creates a new Article 3 in Chapter 50A, titled the Uniform Deployed Parents Custody and Visitation Act.  The Uniform Act is broken down into four parts.  Part 1 of the Act are the “General Provisions” and begins with an outline of 18 various definitions used throughout the Uniform Act.  While most of the definitions are standard and should be reviewed by the family law practitioner, there are a few worth mentioning.  “Caretaking authority” is defined as “the right to live with and care for a child on a day-to-day basis, including physical custody, parenting time, right to access, and visitation.”   “Custodial responsibility” is defined as “a comprehensive term that includes any and all powers and duties relating to caretaking authority and decision-making authority for a child.  The term includes custody, physical custody, legal custody, parenting time, right to access, visitation, and the authority to designate limited contact with a child.”   Another definition to note is that “record” is specifically defined as “information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.”

Part 1 of the Act includes a provision for attorney fees “and other appropriate relief” to be assessed if a party acts in bad faith or intentionally fails to comply with the requirements of the Act.   Part 1 also requires that an issuing court have jurisdiction pursuant to the UCCJEA, but provides that deployment does not change the residence of deploying parent.

Furthermore, Part 1 requires a deploying parent to provide notice to the other parent of a pending deployment not later than seven days after the deploying parent receives notice of deployment unless the parent is prevented from providing notice due to “circumstances of service”, and then notice must be provided as soon as reasonably possible.   The notice required under this provision must be provided in a “record”.  The deploying parent also must provide other parent with a plan for fulfilling that parent’s share of custodial responsibility.  If a person to whom custodial responsibility has been assigned during a parent’s deployment moves, then notice must be provided to the deployed parent and any other person with custodial responsibility, and notice must be provided to the court if there is a court proceeding.

Part 2 of the Act allows parents to enter into a temporary agreement granting custodial responsibility during one parent’s deployment.  The agreement must be in writing and signed by both parents and any nonparent who is given custodial responsibility.   The statute outlines a non-exclusive list of items that may be included in an agreement.   If there is an existing court order for custody or child support, the agreement must be filed with the court.

Part 3 of the Act outlines the judicial procedures after a parent receives notice of deployment.  Either parent can seek a judicial order after notice of deployment and the court may only enter a temporary order, unless the deploying parent agrees to a permanent order.   The hearing is to be expedited  and testimony by electronic means is allowed, unless the court finds good cause to require personal appearance.   A prior judicial order which contains provisions for deployment must be enforced unless the circumstances require modification and the court must enforce prior written agreement between parents unless agreement found to be contrary to best interests of child.

The statute allows for the court to grant caretaking authority to a nonparent who is an adult family member of the child or an adult with whom the child has a close and substantial relationship.   This grant of authority is limited by the language “in accordance with the laws of this State….”  In this author’s opinion, this limitation makes most of the provisions in Section 3 either invalid or extremely limited.  The current North Carolina law in the area of third party custody is limited to situations where parents are alleged and proven to be unfit, neglectful or have acted inconsistent with their parental rights.

If the other parent will not agree to this third party, the court is limited to allowing the third party only the time allowed the deploying parent by a current order or “the amount of time the deploying parent habitually care for the child.”   The statute also allows the court to grant decision-making authority to this third party to an adult family member or person with whom the child has a close and substantial relationship and the court must be specific about the powers being granted.  Any nonparent is made a party to the action until the grant of authority is terminated.

The statute allows an order to outline contact for the child with the nonparent  and outlines certain factors each order must contain, in addition to being only a temporary order.

Part 4 of the new statute contains the termination provisions.  An agreement under the new law terminates upon further agreement by the parents or 60 days after the deploying parent provides notice that he or she has returned from deployment.   If an order was entered by a court, the order terminates by agreement of the parties  or 60 days after the deployed parent provides notice of return.

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No Social Security Number of Absolute Divorce

One piece of legislation that was passed was overdue.  With Session Law 2013-93, the General Assembly removed the provisions N.C.G.S. § 50-8 which required that the plaintiff in a divorce proceeding provide his/her social security number and the social security number of the defendant, if known, in a complaint for absolute divorce and a judgment of divorce.

This law was effective when it became law on June 12, 2013.

Entireties Property Presumed to be Marital Property

With Session Law 2013-103 , N.C.G.S. § 50-20 was amended to include the presumption that real property acquired after marriage and before separation as a tenancy by the entireties is marital property, no matter what source of funds was used to acquire the property.  The “marital gift presumption” has been a part of North Carolina equitable distribution law since at least 1985.

McLeod v. McLeod, 74 N.C.App. 144, 327 S.E.2d 910, review denied, 314 N.C. 331, 333 S.E.2d 488 (1985).  This same bill also amended the definition of divisible property to clarify that passive increase and decreases in marital debt and financing charges and interest related to marital debt are divisible  (emphasis added).  This change makes it clear that active increases and decreases are not divisible (emphasis added).

The content provided here is for informational purposes only and should not be construed as legal advice on any subject.

Contact Myers Law Firm

We are committed to continuing to serve our clients’ legal needs

Single Divider

We are able to meet with clients and hold consultations with prospective clients via telephone or video conference. If you need to contact us, please do not hesitate; we are happy to speak with you about your situation, your needs, and how we can help.

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Barker v Barker

Barker v Barker – Civil Contempt

Defendant/Father appealed from an order finding him in contempt for failure to comply with a consent order directing him to pay a portion of his child’s college tuition and expenses. The order was affirmed by the North Carolina Court of Appeals. The parties signed a consent order on August 20, 2003, which resolved all of the issues between them regarding child custody, child support, equitable distribution and spousal support. The issue pertinent to the appeal was the parties’ agreement regarding payment of tuition costs and expenses for college. Father agreed to pay 90% and Mother agreed to pay 10% of the tuition, room and board costs of the children’s college education, as long as the “diligently applied themselves to the pursuit of education.”

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