Each state has its own laws that determine how property is divided when spouses separate. In North Carolina, this division of property is called “equitable distribution.” Equitable distribution may be agreed upon between the parties or determined by a trial court. An agreement between the parties typically is formalized in a “consent order’ signed by a judge or in a private contract referred to as a “Separation Agreement and Property Settlement. The choice of an appropriate document to memorialize the settlement terms can be critical to the outcome of a case.
There are four basic steps involved in the process of equitable distribution.
- Identify all property and debt owned or owed by the parties as of the date of separation together with any property acquired after the date of separation from marital property (divisible property);
- Classify the property as either marital, separate, divisible or mixed with elements of more than one classification;
- Value all marital and divisible property and debt; and
- Distribute the marital and divisible property and debt equitably between the parties.
The steps involved in equitable distribution may sound relatively simple, but it sometimes can be challenging to identify all assets and debts owned or owed by the parties, especially if the parties have a large estate, or if one or both spouses have attempted to divert or conceal assets. Disputes between the parties over identification, classification, valuation, or distribution of the assets and debts can complicate the equitable distribution process and make it more difficult to resolve the matter amicably.
In actions for equitable distribution, North Carolina law requires that the court equitably distribute the net fair market value of the marital and divisible property between the parties; however, an equitable division does not always mean an equal division. There is a presumption that the marital and divisible property should be divided equally, but this presumption may be rebutted. North Carolina General Statute §50-20(c) enumerates the factors the trial judge should consider in determining whether an unequal distribution of the marital and divisible property is equitable. Some of those factors include the age and health of the parties, the duration of the marriage, the need for a spouse with custody of a child to occupy the family home, the contribution of a spouse to help educate or develop the career of the other spouse, and the assets and debts that the parties individually own at the time the marital estate is distributed. The judge has broad discretion in the weight that is given to various factors in determining whether an unequal distribution of the marital estate is equitable.
Regardless of whether you and your spouse are able to negotiate a property settlement or your claim is decided by a judge, having a skilled, experienced, and knowledgeable family law attorney representing you throughout the equitable distribution process can be crucial to the outcome of your equitable distribution case.
The family law attorneys at Tharrington Smith represent clients throughout the divorce process. We are well-versed in the fine details of family financial settlements. We offer unparalleled legal representation in equitable distribution matters, including those involving complex issues such as closely held business interests, tracing of separate assets, and those where high income interests and substantial assets are at stake. While we make every reasonable effort to reach out-of-court settlements, and are often successful, we are also seasoned litigators, fully equipped to represent clients before family court judges.