Property distribution
Unless spouses can agree how to divide their marital estate, the court will divide marital and divisible property and debt in accordance with the North Carolina Equitable Distribution Statute (N.C.G.S. §50-20). In doing this, the court’s job is to:
1. classify the property as marital property, divisible property or the separate property of one spouse;
2. value the marital and divisible property and debts; and
3. distribute the marital and divisible property and debts equitably between the parties.
The law of equitable distribution is extremely complex. When dividing your marital estate, you need an experienced divorce attorney in Cary, North Carolina, who understands these complicated financial issues. At Ward Family Law Group, we have the experience you need. We have represented clients in the division of multi-million dollar estates, as well as those who are or whose spouses are shareholders in closely-held businesses. We work closely with business valuators, certified public accountants, certified divorce planners and pension valuation experts to help you obtain the best settlement possible.
Marital property is valued on the date of separation. Depending on the type of divisible property at issue, divisible property is usually valued on the date of distribution. For example, a house that is marital property will be valued as of the date of separation, but any divisible property associated with the house, such as an increase in the value of the property due to passive market factors, will be determined as of the date the property is to be distributed. Therefore, you may have to have the marital residence appraised as of the date of separation and a date closer to the actual distribution date if that date is substantially later than the date of separation.
Divisible property can also include property or property rights received after the date of separation but before the date of distribution that were acquired as a result of the efforts of either spouse during the marriage and before the date of separation, including, but not limited to, commissions, bonuses, and other contractual rights. An example of this might include a bonus a spouse receives after the date of separation for work he performed during the marriage before the date of separation. Passive income from marital property received after the date of separation is also divisible property subjection to division between the parties. This can include gains, losses, or interest and dividends on investment accounts simply due to passive market factors.
There is a strong presumption that an equal (50/50) division of the property is an equitable, or fair, division of the marital estate. However, a judge may consider various distributional factors and determine that an equal division would not be fair in the case and award one spouse more than 50% of the marital estate. The distributional factors that the Court may consider are:
1. Income, property and debts of a party;
2. Support obligations from prior marriages;
3. Length of marriage and age and health of each party;
4. Needs of custodial spouse to own or to possess the marital home and household effects;
5. Expectation of retirement benefits which are separate 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. Contributions of one spouse to the education of the other;
8. Direct contributions that increase the value of separate property;
9. Liquid or non-liquid nature of property;
10. Difficulty in valuing an interest in a business;
11. Tax consequences resulting from or likely resulting from the liquidation or sale of an asset; and
12. Actions taken by either party to preserve or waste marital assets; and
13. Other economic factors.
The division of the marital estate can be a complicated process, and it is important that you have an attorney who understands these complex financial issues and can protect your interests.
Frequently asked questions
Generally, marital misconduct, such as adultery, is not relevant at all in the litigation of property rights. The division of property in North Carolina is based upon the economic factors described above.
Generally, transfers of property between spouses or former spouses incident to a divorce are non-taxable pursuant to Section 1041 of the Internal Revenue Code, so no gain or loss is recognized by either party as a result of such transfer between the two spouses. However, there may be significant tax consequences when funds are transferred from retirement and individual retirement accounts and when marital assets are transferred to third parties. There can be a number of hidden tax issues that you should consider when determining how to divide your marital estate. It is critical that all property distribution matters be reviewed and analyzed by your attorney and your accountant for potential tax consequences.
Maybe. Even though you received the personal injury settlement after the date of separation, if the settlement resulted from an injury occurring during the marriage, then the settlement may be “divisible” property subject to distribution between the parties. However, any part of the settlement which represents compensation for non-economic loss (i.e., for pain and suffering and disability) is the injured spouse’s separate property. Compensation for economic loss, such as lost wages, loss of earning capacity during the marriage and reimbursement for medical expenses paid out of marital funds during the marriage would be marital or divisible property subject to division between the parties.
If the pension rights were earned during the marriage and prior to the date of separation, then the pension is marital property and subject to division between the spouses.
There are two ways to deal with the pension. You can value the pension and the spouse who owns the pension can keep the entire pension and the non-owning spouse can receive other marital assets to offset her interest in the pension, or the pension can be divided pursuant to a domestic relations order and the non-owning spouse will receive her share of the pension as a lump sum payment, at the time the spouse owning the pension begins receiving payments under the pension plan, or in some other payment format as permitted by the pension plan’s administrator. If you are the non-owning spouse, make sure that your attorney understands the importance of survivorship rights/options under the pension plan, both pre-retirement and post-retirement. You do not want your interest in the pension to die with your spouse.
Wrong. Stock options are a form of divisible property and are subject to division. It is important that your attorney review the company’s stock option plan/agreement, know how to divide options, understand the tax consequences in dividing these assets, and know what could terminate a person’s right to these options.