In the United States, forty to fifty percent of marriages will ultimately end in divorce. Sadly, once you have made the difficult decision to end the marriage, the task of dividing up the assets you once shared, can make this difficult time even more trying. An attorney can help you navigate the sometimes-confusing laws and ensure that the divorce proceeds fairly and in a way that will best meet the needs of you and your family.
North Carolina is an equitable distribution state. This means that once you or your spouse file for divorce, and request the court to divide the assets, the court will decide what constitutes:
- marital property,
- divisible property,
- and separate property.
The court will then proceed to divide the marital and divisible property, equitably, or fairly. It is important to understand that when the court divides assets during a divorce, equal is not always equitable. Separate property will remain the property of one spouse and will not be subject to equitable division.
It is important to know that you and your spouse can agree on how you would like to divide the property, without the assistance of the court, by entering into a separation agreement. A separation agreement may help to avoid a more lengthy and costly dispute. Again, a qualified family law attorney can help you better understand your legal rights and options.
Below are ten ways that assets get divided in divorce that may surprise you:
1. Marital (and Divisible) Property is Divided Fairly
In North Carolina, the courts will divide property in a way that is equitable, or fair. The court will assume that dividing the marital property evenly, 50/50, is what is most fair. This is true unless the court determines that dividing the assets equally is not fair.
Marital property is defined as all property acquired by either party, or both, after the date of marriage but before the date of separation. Marital property excludes separate property. Marital property includes personal and real property, for example:
- income by either spouse;
- the marital house or rental properties;
- furniture, appliances, cars, boats, artwork;
- bank accounts, stocks, bonds;
- mortgages and loans;
- gifts from one spouse to the other.
In addition, marital property includes all vested and nonvested pension, retirement, and other deferred compensation rights as well as vested and nonvested military pensions eligible under the federal Uniformed Services Former Spouses’ Protection Act.
To ensure the marital property is divided fairly the court must value all of the marital assets and debts on the date of separation. However, there may be changes in the value of assets and debts between the date of separation and the actual date of distribution. To account for this, the court will divide this divisible property equitably as it does marital property.
2. The House Is Not Always Marital Property
Like any property at issue in the divorce, the court may deem the marital home to be separate property and, as such, the property of one spouse only. This could occur, for example, if the home was acquired by one spouse prior to the marriage or if the home was a gift or inherited. If this is the case, the house, or the value of the house, would not be subject to equitable distribution.
If the house is deemed marital property, however, it will be equitably divided. There are three options to accomplish equitable division of the marital home:
- one spouse will retain the house and “buy out” the other spouse;
- the property can be sold, and each spouse would keep half of the proceeds of the sale; or
- the home can be co-owned and thereby allow, for example, the children to remain in the home with one spouse while both parents remain responsible for paying the mortgage.
3. Marital Property Includes Your Debts
Debts acquired during the marriage are also considered marital property. As with all marital property, this is true regardless of whether the debt is in one or both spouses’ names so long as the debt was acquired during the marriage. As with other marital property the court will presume that all marital debts should be divided equally unless it is more equitable for one spouse to acquire a greater (or lesser) portion of the debt.
4. One Spouse May be Entitled to More (or Less) Assets Than the Other Spouse
Equitable distribution, again, refers to what the court determines is fair. In some cases, the court may determine that it would not be fair to divide the marital and divisible assets equally, or 50/50. Instead, the court can consider several factors when deciding what will be fair in a particular case. Below are some of the factors the court will consider in deciding if assets are to be divided in a manner other than 50/50:
- The duration of the marriage and the age and physical and mental health of both parties.
- The needs 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.
- Any direct or indirect contribution made by one spouse to help educate or develop the career potential of the other spouse.
- Any direct contribution to an increase in value of separate property which occurs during the course of the marriage.
- 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.
- Any other factor which the court finds to be just and proper.
5. Your Contribution to Help Educate or Develop Your Spouse’s Career Counts
North Carolina Statute 50-20(c)(7) provides that one spouse’s contribution to the other spouse’s education or career will be considered when determining equitable distribution of marital property. For example, if you or your spouse raised children while supporting the other in obtaining an education or furthering a career, the court may determine that an unequal division of certain property is equitable.
6. Separate Property is Not Divided Between the Parties
Separate property is all real and personal property that one spouse,
- acquires before the marriage, or
- property that a spouse is gifted, or
- property that one spouse inherits.
Separate property is not subject to equitable distribution and, therefore, will not be fairly divided as with the marital and divisible property. The party arguing that certain property is separate, and not marital property, must prove this to the court by presenting evidence to support the argument. If that party cannot show the nature of the property as separate, the property will be considered marital property and subject to equitable distribution.
7. Separate Property Can Become Marital Property
Property that was once separate property can become marital property. For example, assume one party owns a piece of real property prior to marriage. If then, after getting married, the party changes the title to the property to include both spouses’ names, the property could then be considered marital property. The court will assume the act of changing the title of the property was a gift, and, therefore, a marital asset. Additionally, separate property can become marital property if there has been a “comingling” of separate and marital property.
8. Marital Misconduct is Not Considered When Dividing Property
Marital misconduct, “bad” behavior, or the fact that one spouse had an extramarital affair does not, in and of itself, affect property division during a divorce. It may play a role, however, if your spouse wasted marital assets while engaging in this behavior. Additionally, it may also play a role in the court’s decision regarding alimony and, therefore, it’s important to talk to your attorney if you have any concerns regarding misuse of marital property.
9. Your Pets are Considered Personal Property
Pets are considered personal property in North Carolina, much like a car or furniture, for example. As personal property, pets are subject to equitable distribution. This means that the family pet would belong to one spouse at the exclusion of the other. Many pet owners will attest to the fact that their pet is much more than personal property, however, and emotions can run high when deciding who will get to keep the pet. Be sure to ask about the possibility for an alternative resolution such as an amicable agreement with your spouse, shared custody, or visitation.
10. Prenuptial Agreements are Enforceable
North Carolina adheres to the Uniform Prenuptial Agreement Act which sets forth guidelines for an enforceable premarital agreement. Assuming the requirements are met, and the agreement is upheld by the court, the terms of the agreement will be enforced. The terms can cover property division, in addition to other matters, should the couple’s marriage end in the future.
Going through a divorce can be an emotional and difficult time for many. It is always a good idea to speak with an attorney that has knowledge and experience in family law matters. An attorney’s expertise can help to make the process as smooth and fair as possible for you and your family.
References:
- American Psychological Association. Marriage & Divorce. American Psychological Association Web Site.
- HG.org Legal Resources. North Carolina Divorce Law, Divorce and Legal Separation in North Carolina. HG.org Web Site.
- Legal Dictionary. Marital Property. Legal Dictionary Web Site.
- North Carolina General Statutes, Chapter 50: Divorce and Alimony.
- HG.org Legal Resources. Dividing Real Estate in Divorce – What Happens to the House? HG.org Web Site.
- Divorce Knowledgebase. The Complete Guide to Divorce and Property Division. Divorce Knowledgebase Web Site.
- Michigan State University College of Law. Animal Legal and Historical Center. Brief Summary of Pets in Divorce/ Custody Issues, 2009. Michigan State University College of Law Web Site.
- DivorceNet Published by Nolo. Prenuptial Agreements in North Carolina, An overview of prenuptial agreements in North Carolina. DivorceNet Web Site.