Equitable Distribution of Property and Debts

During a marriage, husbands and wives generally acquire property, including but not limited to a home, cars, bank accounts, a business, IRA’s or stock options. North Carolina law provides for the division and distribution of this property. Once a couple has separated, either party may ask the court for an “equitable distribution” which is the process of identifying, classifying, evaluating and distributing property.

This process can be one of the most challenging areas of family law and it forces lawyers and judges to confront difficult and diverse issues. Hence, the process of equitable distribution takes organization, patience, time, problem solving skills, and the involvement of other competent professionals such as appraisers and accountants.

What to Consider:

  • Equitable distribution is the legal framework used in North Carolina to divide marital property and debts in a divorce.
  • It’s based on the idea that a marriage is a partnership, and each spouse contributes to the marital estate.
  • The goal is to achieve a fair and just distribution of assets and liabilities, not necessarily an equal one. 

 Classification of Property and Debts:

  • Before division, property and debts are classified as either marital, separate, or divisible. 
  • Marital property: is generally everything acquired during the marriage, regardless of whose name it’s in, except for separate property. 
  • Separate property: includes assets owned before the marriage, gifts or inheritances received during the marriage, or assets exchanged for separate property. 
  • Divisible property: includes assets or debts acquired or accumulated after the separation date, but before the divorce is finalized.

Factors Considered by the Court:

  • Length of the marriage: Longer marriages may warrant a different distribution than shorter ones. 
  • Each spouse’s contribution to the marriage: This includes financial contributions, homemaking, and childcare. 
  • Each spouse’s income and earning potential: This helps ensure a fair distribution based on future needs. 
  • Economic circumstances of each spouse: The court considers the financial situation of each spouse after the divorce. 
  • Value of marital property and debts: The court will assign fair market value to assets and debts. 
  • Other factors: Tax implications, health, age, and any agreements between the spouses can also be considered. 

Debt Distribution:

  • Debts are also subject to equitable distribution.
  • The spouse claiming a debt is marital bears the burden of proving it.
  • Debts incurred for the joint benefit of the couple or to pay off marital debt are more likely to be divided equitably. 

Importance of Legal Counsel:

  • Equitable distribution can be complex, and the specific factors considered by the court can vary. 
  • It’s crucial to consult with an experienced North Carolina divorce attorney to understand your rights and options. 
  • An attorney can help you gather the necessary information, negotiate a fair settlement, or represent you in court if necessary.