The three steps: classify, value, divide
Every equitable distribution case follows the same basic path:
- Classify. The court decides whether each asset and debt is marital, separate, or divisible property.
- Value. The court assigns a value to marital property, generally as of the date of separation.
- Divide. The court divides the net value of the marital estate between the spouses.
Most of the disagreement in these cases happens in the first two steps. Getting the classification and the numbers right is where careful preparation pays off.
Marital, separate, and divisible property
Marital property is generally everything either spouse acquired during the marriage and before the date of separation, no matter whose name is on it. That can include the house, cars, bank accounts, retirement accounts, pensions, a business, and debts.
Separate property generally includes:
- Property a spouse owned before the marriage.
- Property a spouse received by gift or inheritance during the marriage, unless it was given to both spouses.
- Property acquired in exchange for separate property, if the trail can be shown.
Divisible property covers changes after the date of separation, such as passive growth or loss in a retirement account, income from marital property, and some payments on marital debt.
Separate property can become mixed with marital property. For example, money inherited by one spouse and used to pay down the mortgage on a jointly owned house raises a tracing question. Records matter.
Equal division and when it can be unequal
North Carolina presumes that an equal division of the net marital estate is fair. A spouse who wants more than half has to prove that an equal split would not be equitable. The statute lists factors the judge may weigh, including:
- Each spouse’s income, property, and debts at the time of division.
- Support obligations from a prior marriage.
- The length of the marriage and each spouse’s age and health.
- The need of a custodial parent to live in or own the marital home.
- Contributions to the other spouse’s education or career.
- Acts by either spouse after separation to preserve, develop, waste, or reduce the value of marital property.
The house, retirement accounts, and a business
Some assets need extra care.
- The marital home. The court may give the house to one spouse and balance the division with other assets or a payment, or it may order the house sold. Refinancing and who stays in the home while the case is pending are often early issues.
- Retirement accounts and pensions. Only the part earned during the marriage and before separation is marital. Dividing a plan usually requires a special order directed to the plan administrator, often called a QDRO.
- A business. Valuing a business can require financial records and an outside appraiser. Personal goodwill and business goodwill may be treated differently.
Debts are divided too. A court order dividing a credit card or loan does not change your contract with the lender, so a creditor may still look to both spouses on a joint account.
The deadline and the court process
An equitable distribution claim must be filed before the absolute divorce judgment is entered. If it is not, the right to ask the court to divide property is generally lost. Either spouse can file the claim, and it can be filed any time after separation.
Once the claim is served, each spouse must serve a sworn inventory listing the property each claims and its value as of the date of separation. Many cases settle through negotiation or mediation. If the case does not settle, it goes to trial. A judge can also enter an interim order dividing some property, or protecting it, while the case is pending.
Spouses can settle property without a lawsuit in a separation agreement or property settlement. A signed agreement that fully settles property can end the claim, so have it reviewed before signing.
How Huggins Law Firm can help
We help spouses file or respond to equitable distribution claims, prepare inventories, trace separate property, and present valuations. We tell you the hard truth about which assets are likely to be marital and what a fair division may look like. We prepare every case as though it is going to trial, so the facts are ready whether the case settles or not.
We handle property division cases in Guilford County district court in Greensboro and High Point. Hablamos español. We explain our fee in writing before you hire us. Call (336) 281-2008 to request a consultation.
This page is general information about North Carolina law, not legal advice. Every case is different, and no lawyer can promise a result.
Questions people ask us
Is North Carolina a fifty-fifty state in a divorce?
North Carolina presumes that an equal division of the net marital estate is fair. A spouse can ask for an unequal division by proving that equal is not equitable under the factors in the statute. Separate property is not divided at all.
Is an inheritance marital property in NC?
An inheritance received by one spouse is generally separate property. It can lose that status if it is mixed with marital assets and cannot be traced, or if it was clearly given to both spouses.
What date is used to value property in an NC divorce?
Marital property is generally valued as of the date of separation. Changes in value after that date may be treated as divisible property and also divided.
Do I lose my share of the property if the divorce is final?
If no equitable distribution claim was filed before the divorce judgment was entered, the right to ask the court to divide property is generally lost. Act before the divorce is final.
Does adultery affect property division in North Carolina?
The factors the statute lists are about money and property, such as income, debts, contributions, and acts that waste or preserve marital property. Adultery is not one of them. Alimony is a separate claim with its own rules.