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Property Settlement

In North Carolina, property is equitably distributed at the end of a marriage if properly requested.

property is equitably distributed

Division of property, also called equitable distribution of property, is one aspect of the break-up of a marriage. Property division may occur before, but not after, the divorce unless a valid claim for equitable distribution was filed before the divorce. You must file a complaint for equitable distribution before you are divorced! If the parties do not resolve property division in writing by agreement or through the filing of a lawsuit for equitable distribution before one party obtains a divorce, property vests based on title. In other words, if a husband has a pension in his name and the wife does not file for equitable distribution or otherwise resolve property before the divorce, the husband keeps his entire pension.

Marital property subject to division

All property acquired during the marriage is subject to division if a claim for equitable distribution has been timely and properly made. In the Fifth District, a Schedule of Assets is used to help identify marital property. Once the property is identified, it is classified as marital, separate or mixed (part marital and part separate), valued and divided. In the past, the marital home used to be the most valuable marital asset. Today, a spouse's pension, 401(k) and other retirement benefits are often the most valuable asset subject to division.

Dividing marital property

After a lawsuit for equitable distribution is filed, the plaintiff has 90 days to file an initial listing (this varies somewhat by county under their local rules so you should always seek the counsel of an attorney). Here is an example of an initial property listing used in the Fifth Judicial District.

Distributional factors

Equitable Distribution (ED) doesn't always split property equally (i.e., not fifty-fifty). With equitable distribution, the court considers distributional factors, the classification of property (marital, separate, or mixed), and other factors. Both assets and debts are considered during property distribution. The statutory factors include:

  1. The income, property, and liabilities of each party at the time the division of property is to become effective.

  2. Any obligation for support arising out of a prior marriage.

  3. The duration of the marriage and the age and physical and mental health of both parties.

  4. The need of a parent with custody of a child or children of the marriage to occupy or own the marital residence and to use or own its household effects.

  5. The expectation of pension, retirement, or other deferred compensation rights that are not marital property.

  6. Any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services, or lack thereof, as a spouse, parent, wage earner or homemaker.

  7. Any direct or indirect contribution made by one spouse to help educate or develop the career potential of the other spouse.

  8. Any direct contribution to an increase in value of separate property which occurs during the course of the marriage.

  9. The liquid or nonliquid character of all marital property and divisible property.

  10. The difficulty of evaluating any component asset or any interest in a business, corporation or profession, and the economic desirability of retaining such asset or interest, intact and free from any claim or interference by the other party.

  11. The tax consequences to each party.

  12. Acts of either party to maintain, preserve, develop, or expand; or to waste, neglect, devalue or convert the marital property or divisible property, or both, during the period after separation of the parties and before the time of distribution.

  13. In the event of the death of either party prior to the entry of any order for the distribution of property made pursuant to this subsection:

    1. Property passing to the surviving spouse by will or through intestacy due to the death of a spouse.

    2. Property held as tenants by the entirety or as joint tenants with rights of survivorship passing to the surviving spouse due to the death of a spouse.

    3. Property passing to the surviving spouse from life insurance, individual retirement accounts, pension or profit-sharing plans, any private or governmental retirement plan or annuity of which the decedent controlled the designation of beneficiary (excluding any benefits under the federal social security system), or any other retirement accounts or contracts, due to the death of a spouse.

    4. The surviving spouse’s right to claim an "elective share" pursuant to G.S. 30-3.1 through G.S. 30-33, unless otherwise waived.

  14. Any other factor which the court finds to be just and proper.

Process

There are two approaches to property division: by Separation Agreement and Property Settlement (SAPS) or by a court action for equitable distribution. Under either approach, it is advisable to obtain disclosure under oath of the property that the other party has (see Discover Discovery: The importance of the Discovery Process in Family Law for more information on why such disclosure is important in an equitable distribution action). If an ED claim is filed, there are strict deadlines which vary by county to which must be strictly adherred. ED cases are generally mediated by a trained mediator before the case goes to trial. Most equitable distribution cases are resolved at mediation without trial.

Contact an attorney who routinely represents clients involved in divorce matters, including property distribution, for advice concerning your specific situation. Examples provided on this site are for informational purposes only and may not be suitable for your situation.


Resources

Read the NC statute The Law on Equitable Distribution

N.C. Gen. Stat. §50-20 sets forth NC Law on Equitable Distribution including the specific factors the court must consider for making an unequal division of marital property

Read the NC statute The Law on Equitable Distribution Procedure

N.C. Gen. Stat. §50-20 sets forth NC Law on Equitable Distribution Procedure including the requirement for filing Initial and Responsive Property Listings and sanctions for delay

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