Property Division in North Carolina: Equitable Distribution

In North Carolina, our laws concerning property division are often referred to as equitable distribution. The Court in equitable distribution matters is tasked with making a fair division of the property and debts acquired during a marriage after a married couple separates or undergoes a divorce. Unlike community property states where assets may be divided 50/50, North Carolina aims for a fair distribution, and that does not always require that each party receive equal shares. A separating or divorcing spouse in North Carolina should seek a clear understanding and guidance regarding these concepts:

(1) “Marital property” means all real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of the separation of the parties, and presently owned, except property determined to be separate property or divisible property (see definitions below).

(2) “Separate property” means all real and personal property acquired by a spouse before marriage or acquired by a spouse by devise, descent, or gift during the course of the marriage. However, property acquired by gift from the other spouse during the course of the marriage shall be considered separate property only if such an intention is stated in the conveyance.

(3) “Divisible Property” includes many other types of property or changes in value to both assets and debts, many of which may take place between the date of separation and the date the assets or debts are divided. Examples of divisible property include appreciation and diminution in value of marital property and property rights received after the date of separation but before the date of distribution that was acquired as a result of the efforts of either spouse during the marriage and before the date of separation (commissions, bonuses, etc.), as well as passive income from marital property received after the date of separation such as interest and dividends; and passive increases and passive decreases in marital debt and financing charges and interest related to marital debt.

Our equitable distribution statute specifically provides that here shall be an equal division by using net value of marital property and net value of divisible property unless the court determines that an equal division is not equitable. However, if the court determines that an equal division is not equitable, the court shall divide the marital property and divisible property equitably. In light of the complexity of these laws, it is important to have legal representation with an attorney who is experienced with both the laws in this area, but also the procedures required by the court to litigate these issues.