When spouses separate it is necessary to divide the property, other assets and debts acquired during the marriage.
The rights to equitable distribution of marital property or property distribution, vest at the time of the parties’ separation. The rights to property distribution are not automatic and must be specifically asserted by one or both of the parties.
If one or both parties request a property distribution and the parties cannot agree, North Carolina law directs that the court will determine what is considered marital property and shall provide for an equitable distribution.
According to North Carolina General Statute § 50-20, Marital Property is defined as real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of separation of the parties, and presently owned, except property determined to be separate property or divisible property.
Separate property is defined as all real and personal property acquired by a spouse before marriage or acquired by a spouse by bequest, devise, descent or gift during the course of the marriage.
Divisible property is defined as: all appreciation and diminution in value of marital and divisible property occurring after the date of separation and prior to the date of distribution, (except that appreciation or diminution in value which is the result of post separation actions or activities of a spouse); all property, property rights, or any portion thereof received after the date of separation but before the date of distribution that was acquired as a result of the effort of either spouse during the marriage and before the date of separation, including but not limited to, commissions, bonuses, and contractual rights; passive income from marital property received after the date of separation, including but not limited to, interest and dividends; and increases and decreases in marital debt and financing charges and interest related to marital debt.
In North Carolina, the division of property between the parties will be equal, unless the court determines that an equal division of property is not equitable.
Certain factors can be considered if one party thinks that the marital estate should not be divided equally, but most commonly, whether in court or in private settlement, an equal division is the end result. Normally, an “in kind” division is preferred. This means each spouse receives assets and debts of approximately equal value. This avoids the sale of assets or requiring one party to pay the other party in exchange for the assets.
Temporary orders and injunctive relief can be obtained under the terms of special statutory provisions. This will allow for injunctive relief to prevent disappearance, waste or conversion of property alleged to be marital or separate. This also allows for entry of orders that divide part of the marital assets. Partial distribution may provide for a distributive award. Injunctive relief to prevent disappearance, waste or conversion is available before or after a property distribution action has been initiated. An order partially distributing marital property may not be made until after a property distribution action has been filed.
With the exception of the two special technical provisions, an absolute divorce bars the assertion of a claim for property distribution that was not already pending at the time of the divorce. This bar has been interpreted relatively strictly in case law.
In addition to bar by absolute divorce obtained without preservation of an property distribution claim, the other common bar to property distribution is prior execution of a valid, comprehensive property settlement dividing the parties’ property or otherwise releasing the right to property distribution. If such an agreement has been duly executed in accordance with the formal statutory requirements, the agreement could bar a subsequent property distribution. Such a bar could also arise from written premarital and postnuptial agreements.
Equitable distribution/property division is complex and requires the assistance of an experienced family law attorney. Contact Vavonese Law Firm, PC and Jamie Vavonese to get their years of expertise to help you navigate the details and nuances of your property, assets and debts.