Property Division (Equitable Distribution)

Charlotte Property Division Lawyer

Is North Carolina a Community Property State?

No, it is an equitable distribution state which means marital property/assets will be divided in terms of "fairness" rather than community property/assets granted through marriage. There are certain unique rights which are bestowed upon married couples in the State of North Carolina. One of these rights (in addition to the right to seek alimony) grants you the ability to petition the Court for an equitable distribution of property in the event that you have separated from your spouse.

To this point, the right to apply to the Court for an equitable distribution of the assets and debts which have been accumulated during the course of a marriage is very distinguishable from the lack of rights which applies to an unmarried couple. Specifically, the key concept behind the right of a married person to seek an equitable distribution of property is that "title" is irrelevant. With the understanding that there are some exceptions, here is a very simple example: If you are in an unmarried relationship in North Carolina and you live in a home which is titled in your significant other's name, then the home will be the property of your significant other when the relationship ends, regardless of how many mortgage payments you may have made during the relationship.

On the other hand, if you are legally married North Carolina, it does not matter whether the home is titled only in your husband's name. Rather, we work under the general assumption that anything, whether it be an asset or a debt, is marital property (joint property) under the laws pertaining to equitable distribution.

The Equitable Distribution Process

Equitable distribution can essentially be broken down into a four-step process:

  • First, we must identify all property, whether it be a bank account, a piece of furniture, a retirement account, a collection of guns, or otherwise.
  • Second, we must classify the property as either "marital property," "divisible property," or "separate property." When we say "marital property," we are generally referring to all property interests which was obtained (assets) or incurred (debts) during the course of the marriage. When we say "separate property," we are generally referring to property which was brought into the marriage by a party and property which was received by one party as a gift or through inheritance. And when we say "divisible property," we are referring to all property interests obtained between the date of separation and the date of the final distribution of the marital estate.
  • Third, we must perform a valuation of the assets and debts which comprise the marital estate, with the date of separation being the preferred date upon which we base said valuation.
  • Fourth, the property will then be distributed in an "equitable" manner. It is worth noting at this point that there is a common misperception that the term “equitable distribution” means splitting the marital and divisible assets and debt right down the middle, dollar-for-dollar. However, what the term really means is that the marital property and divisible property will be distributed by the Court according to principles of fairness. Under the distributional factors utilized by our Court system, the concept of distributing property according to the principle of "fairness" does not always equate with the term "equal." With that said, it is important to emphasize that there is a rebuttable presumption in favor of an equal division. However, the Court has great discretion in making an uneven distribution so long as at least one of the statutory factors affecting distribution is present. Some of those factors include, but are not limited to the incomes of the parties, prior support obligations, financial and nonfinancial contributions to the marriage, the value of separate property components, etc.

Equitable Distribution and Mediation

Notwithstanding the commentary set forth above and the references to how the equitable distribution process is handled by the Court system, it is often the case that two parties (preferably with the assistance of an experienced family law mediator or their respective family law attorneys) will negotiate a resolution related to the division of their marital estate without having to utilize the Court system.

In this case, the parties and their attorneys are still very likely to utilize the general principles of equitable distribution in the negotiation process. However, the final agreement of the parties will usually be codified in a separation, property settlement, child custody, child support and alimony agreement (or any variation thereof depending upon your individual circumstances) as opposed to a formal Order being issued by the Court.

What About Attorney’s Fees?

Finally, we are often asked about whether you can receive an award of attorney's fees related to having to go through the Court system to obtain a fair division of property. In short, the answer is "no," and we believe this is the state legislature's way of telling people not to spend more on attorneys than their property is worth!

However, there is one exception to this rule: The Court may award you attorney’s fees in relation to your claim for Equitable Distribution if there are verified actions by your spouse to waste, neglect, devalue, or convert marital property during the period after the date of separation and before the time of distribution. As always, this issue and any related determination is at the sole discretion of the Court.

Having an experienced attorney on your side is the most important step to negotiate a fair property settlement during a separation or divorce. Call Coggin Law at (704) 286-0600 to schedule a consultation.

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