Equitable Distribution
| Equitable Distribution | |
| Statute: | N.C.G.S. § 50-20 |
| Description | How property and debt are distributed between the spouses |
| Takeaway | Most of the time, most property/debt is divided 50/50, regardless of which spouse is on the title. |
Equitable Distribution means the fair distribution of property and debt between the spouses. The courts generally presume a 50/50 distribution is fair,[1] regardless of which spouse is on each title or account. However, there are many rules and exceptions.[2] There are three steps to determining a 50/50 distribution: (1) list and categorize property/debt (2) value each item on the list (3) distribute the property/debt between the spouses.
When Can a Lawsuit be Filed
You can file a lawsuit for equitable distribution anytime after you and your spouse begin living in separate homes[3] but before the court signs a divorce decree.[4] Since you have to live in separate homes for at least one year before filing for a divorce decree,[5] there is always at least a one-year window to pursue equitable distribution.
If the court signs a divorce decree before any equitable distribution claims are filed, both spouses will own whatever property is in their name. If both spouses are still living together, either one spouse can move out or one spouse can try to evict the other through a "Divorce from Bed and Board" lawsuit.
Financial Disclosures
When an equitable distribution claim is made in court, each spouse is required to prepare and share an "Inventory Affidavit" disclosing all of their assets and debts, as well as a "Certification of Initial Disclosures" promising all of the proper evidence has been shared with their spouse. The spouse that initially files an equitable distribution claim has 90 days after their claims were served on their spouse to provide their Inventory Affidavit. The other spouse has 30 days after that to provide their own inventory affidavit.[6]
Each courthouse has their own forms for the inventory affidavit and certification of initial disclosures. Often they have different rules about what records and evidence need to be attached. The initial affidavit is a kind of first draft that is not binding.[6] Some courthouses require another similar form closer to trial with legally binding assertions, whereas others just give you up to a certain deadline to make any changes.
Categorization
Your courthouse's financial disclosure forms may ask you to categories each item of property or debt as "marital," "divisible," or "separate." This will also be important in mediation, negotiations, and trial.
Marital
"Marital Property" includes any property or debt acquired during the marriage before the separation date,[7] except for property acquired by inheritance or gift[8] or debts that didn't benefit the marriage.[9] Most of the time, most of the property and debt of either spouse is "marital". Marital property includes things like pensions, retirements, or partially-earned future payments.[7]
Divisible
"Divisible property" is any value or loss resulting from marital property after the separation date.[10] For example, if a house, stocks, or cryptocurrency that is "marital" gains or loses value before the spouses finalize equitable distribution, that gain or loss is divisible.[10] Another example would be income earned from renting a home that is marital property, or a payment for work performed during the marriage.[10]
Separate
Separate property includes property acquired (a) before the marriage, (b) after the separation date, (c) by inheritance or gift, (d) acquired from other separate property, and/or (e) professional or business licenses.[11] However, the court can consider whether the spouses intended something to be a gift to the marriage, if there is evidence of that intention.[11]
Value
Once property is categorized, the value of each item as of the separation date must be determined. Except with divisible property, this is not the item's current value, but the value as of the separation date. If you and your spouse are cooperating, any dispute over value can usually be resolved by agreeing on an appraiser. If you and your spouse are not cooperating, you may need to pay an appraiser to appear in court as an expert witness. However, you can also use other (less expensive) evidence as to the item's value.
Distribution
At the end of the process, a judge or agreement will distribute the property and debt between the spouses. Although the court can distribute property any way the judge feels is fair, there is a strong presumption that a 50/50 distribution of property is fair. That doesn't mean a couch needs to be cut in half so that each spouse can have their share, but each spouse walks away with 50% of the total net value of marital/divisible property/debt. Substantive deviations from 50/50 are rare, but courts routinely make adjustments when one spouse paid for expenses that both spouses were responsible for.
A "distributive award" is what the court calls when one spouse keeps more property than the other. It is a cash payment one spouse makes to the other to balance the distribution to 50/50.
Contact an Attorney
This wiki is provided by North Carolina divorce lawyer David King and his firm King @ Law. You can learn more about King @ Law at www.kinglawnc.com. If you are looking to hire an attorney, have questions, or would like to contribute to this wiki, you can contact attorney King using any of the following methods:
- Schedule a Consultation
- Start a Facebook Chat
- Email: david@kinglawnc.com
- Voicemail: 919 706 5322
References
- ↑ §50-20(c). "There 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. "
- ↑ See §50-20(b)(2) regarding "separate property" such as inheritance, gifts, and pre-marital property that are not divided 50/50.
- ↑ §50-21(a). "At any time after a husband and wife begin to live separate and apart from each other"
- ↑ § 50-11(e). "An absolute divorce obtained within this State shall destroy the right of a spouse to equitable distribution under G.S. 50-20 unless the right is asserted prior to judgment of absolute divorce..."
- ↑ § 50-6. "...if and when the husband and wife have lived separate and apart for one year..."
- ↑ 6.0 6.1 §50-21(a)
- ↑ 7.0 7.1 §50-20(b)(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"
- ↑ §50-20(b)(2). "Marital Property...except property which is separate property under subdivision (2) of this subsection... (2)...acquired by a spouse by devise, descent, or gift during the course of the marriage"
- ↑ Warren v. Warren, (NC App, June 16, 2015). Finding that student loan debt was not marital, when it only benefited the one spouse's future prospects.
- ↑ 10.0 10.1 10.2 §50-20(b)(4)(a). "...appreciation and diminution in value of marital property... except that appreciation or diminution in value which is the result of postseparation actions or activities of a spouse"
- ↑ 11.0 11.1 §50-20(b)(2).