Equitable Distribution and Gifts
Can a house be a “gift?” What is Marital Property? Under the family laws for NC Equitable Distribution and Gifts, a Charlotte home (Denver NC residence) was determined to be marital property in Bond v. Manfredo.
Equitable Distribution involves the classification and distrubution of things like homes, bank accounts, personal property, 529 College Savings Plans, and retirement accounts. It is relatively complicated and often involves substantial sums of money – Bill Powers, Charlotte Divorce Attorney
Property distribution as part of a divorce is handled pursuant to North Carolina General Statutes and is not part of Common Law. Under N.C.G.S. Chapter 50, the family law statute, in handling the equitable distribution of what divorce lawyers may refer to as the “marital estate” or “marital property” (marital assets), the judge is required to follow a 3-step process:
- Determine what assets are marital property; and then,
- Figure out the net value of the property (Debts/encumbrances substracted from FMV Fair Market Value; and then,
- In an equitable fashion, distribute the property
Once a party makes an application for Equitable Distribution in Family Court, the Judge is required to determine what property is divisible property and marital property of the parties. North Carolina Family Laws – Distribution of Property
The family laws of North Carolina also require the Judge write a detailed and specific Order, such that the Court of Appeals (the reviewing court) can determine what was done, how Equitable Distribution was handled, and whether the decision was legally correct.
Equitable Distribution – Discretion of the Court
With few exceptions, Divorce in North Carolina is handled in District Court “Family Court.” Unlike other legal matters like a lawsuit in an accident case or contract dispute, the “amount in controversy” is not alleged in a Complaint for Divorce. For example, “small claims” in North Carolina are legal disputes under $10,000. District Court Civil Trials are limited to $25,000 in value and Superior Court Trials involve legal claims in excess of $25,000. See: Rules of Civil Procedure in North Carolina
As such, District Court Judges decide who gets the kids, visitation, support, and property distribution. That means juries in North Carolina do not decide family law issues involving equitable distribution. And those Family Court judges are given broad discretion in making their rulings. Put simply, but for an abuse of discretion, the Court’s Order will not be overturned.
Charlotte Divorce Lawyers may refer to that as the “abuse of discretion” standard, where the Court’s ruling will not be “disturbed” except in instances where the legal ruling and judgment of the court is “unsupported by reason” and “could not have been the result of competent inquiry.” Failure to follow the family laws in North Carolina (failed to comply with statute) can be an abuse of discretion.
Gifts to the Marital Estate – Gift of a Home
The NC Court of Appeals (NCCOA) ruled on August 21, 2018 in Bond v. Manfredo that use of the husband’s personal funds amounting to over $200,000 was a gift to the marriage. The husband and wife were married in 1999 and separated in 2014. In reviewing the legal ruling of the Hon. Sean P. Smith (a Charlotte NC District Court Judge), the NCCOA concurred with finding that the marital home was indeed a marital asset and therefore subject to Equitable Distribution.
The Husband in the case provided evidence, through personal testimony, that he never meant to make the home a gift to his wife and that her name was added to the Deed of Real Property because the closing attorney and real estate agent said her name had to be included.
Judge Smith found, in his Findings of Fact that, “the property was obtained and purchased for the joint benefit of the parties.” He additionally found the husband, “undoubtedly intended to make a gift to the marriage of the marital home.”
What is Marital Property in North Carolina?
Once again, what is and what is not marital property in North Carolina is defined by statute, which states in relevant part, “It is presumed that all real property creating a tenancy by the entirety acquired after the date of marriage and before the date of separation is marital property.”
Property is considered a gift, under the family laws, “only if such an intention is stated in the conveyance.” The conveyance, which is a transfer of legal ownership, may be inferred when one spouse uses what otherwise may normally be categorized as “separate funds” to purchase property titled to both parties in a marriage as husband and wife (tenancy by entirety).
Bill Powers – Charlotte Divorce Attorney
If you have questions about the financial effects of a separation and divorce, especially given the potential long term consequences of such substantial figures, it makes sense to retain legal representation. Bill Powers is here to help. CALL NOW: 704-342-4357
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529 Savings Plans
Equitable Distribution: 529 Savings Plans
In an Equitable Distribution NC proceeding, how does the Family Court judge classify college savings plans? Specifically, are 529 Savings Plans, funded during the marriage and using marital funds, classified as a marital asset, divisible property, or separate property?
In a case of first impression clarifying Equitable Distribution, the North Carolina Court of appeals classified savings pursuant to 529 Savings Plans a marital asset, and therefore subject to distribution – Bill Powers, Charlotte Family Law Attorney
In an August 7, 2018, published opinion written by the Honorable Richard Dietz, the Court decided a Mecklenburg County divorce matter known as: Berens vs Berens
How is Equitable Distribution NC Decided?
Under the Equitable Distribution laws in North Carolina, the trial court is required to “classify” the property into one of 3 categories:
- Separate Property
- Divisible Property
- Marital Property
Thereafter the court must then “distribute” the respective divisible and marital property. See: N.C.G.S. Chapter 50-20. Marital property in North Carolina is:
All real and personal property acquired by either spouse or both spounses during the course of the marriage and before the date of the spearation of the parties, and presently owned, except property determined to be separate property or divisible property
As a general rule, property acquired during the marriage yet given away to another party (not the husband or wife), including gifts to minor children, is not subject to equitable distribution.
Gifts Under the Equitable Distribution Laws
In order to constitute a “gift” under the law, there are two requirements:
- Present intent to make a gift, also known as donative intent; and,
- Delivery of the gift or actual or constructive delivery
That “delivery” must remove from the gift-giver all control, right, and title over the property.
As they relate to the Equitable Distribution Laws, 529 Savings Plans are NOT gifts. Unless specifically divested of an ownership interest, plan participants normally retain control over and ownership of the Savings Accounts. The children deemed beneficiaries of 529 Savings Plans do not control the assets under the Account.
Furthermore, pursuant to North Carolina 529 Savings Plans, the parents are not required to spend the funds on college or educational expenses for the benefit of their children (the plan beneficiaries). Technically parents have the legal right to withdraw all the funs associated with the 529 Plan, although there would be a hefty tax penalty.
Therefore, without some additional action undertaken by the parents to fully “gift” the 529 funds or restrict the use of the 529 Savings Plan, any savings accrued remain “solely the property of parents.” And as such, 529 Savings Plans are marital property and subject to Equitable Distribution as a marital asset.
Findings of Fact and “Unequal Distribution”
Chapter 50-20 authorizes the Family Court to Order an unequal distribution of marital property, subject to the Court’s proper consideration of the factors as listed within the “statutory factors” including things like:
- Property, income, and Liabilities of the parties
- The amount of time the parties were married
- The mental health and physical health of the parties
- Pensions, retirement accounts, and future deferred compensation not considered marital property
Any time the Family Court orders a division of marital property on an unequal basis, the court must make findings of fact as to each factor presented in evidence.” Many disputes regarding the distribution factors involve the findings of the court and how specific the court must be in specifying those findings of fact.
Divorce Lawyer Charlotte NC – Bill Powers
If you have questions about property distribution of marital assets, we are here to help. As Berens vs Berens makes clear, the process can be extremely complicated and have long-term financial consequences. Even in divorce cases that are generally amicable, disputes can arise over whether the property (both personal property and real property) is a marital asset.
Call Charlotte Divorce Attorney Bill Powers to schedule an in-person consultation: 704-342-4357
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Charlotte Child Custody and Contempt of Court
The North Carolina Court of Appeals ruled this week on a longstanding Charlotte child custody and contempt of court legal issue, described as, “an exceptionally contentious and prolonged custody battle” between a father and mother in Mecklenburg County Family Court. Litigation began in January 2007 involving the custody of two children, one of whom has since “aged out” and has been the subject of various Show Cause Orders, Motions to Show Cause, Charlotte child custody and Contempt of Court proceedings since he was 11 years old.
Another daughter, who is now 17, is the subject of the present appeal in the Charlotte Family Court matter entitled Grissom v. Cohen. To download a copy of the NC Court of Appeals opinion as published on October 2, 2018, see: Charlotte Contempt of Court Child Custody 2018
The extent and nature of the litigation in the matter is remarkable, involving four different Charlotte Family Court Judges, 600+ findings of fact in 2 Custody Orders and at least two full child custody trials in Mecklenburg County. While truly extraordinary in scope and duration, it does serve as an example of the lengths to which parents will fight for child custody and visitation in Charlotte – Bill Powers, Divorce Lawyer Charlotte NC
Contempt of Court and Charlotte Child Custody Issues
In the latest round of litigation and appeals from a ruling by the Honorable Matthew Osman in Charlotte Family Court, the Plaintiff in the appeal (the mother Ms. Grissom) complained that the trial judge made a mistake by, “Failing to hold Father in civil contempt” and in effect, ending or eliminating the mother’s primary custody of a child.
Specifically, the attorney for the mother, a divorce lawyer Charlotte NC, alleged the district court judge:
- Applied the wrong Burden of Proof, confusing the differences and standards of proof, and who had the burden of proof, between
- Civil Contempt of Court – Greater Weight of the Evidence
- Criminal Contempt in Charlotte NC – Beyond a Reasonable Doubt
- Failed to acknowledge or enforce an alleged “Forced Visitation Order”
- Refused to find the father in Contempt of Court
The Court of Appeals disagreed on several legal issues, specifically writing the Plaintiff, “Makes the bold and legally impossible request that this Court make the factual determination” that the Defendant in the case (the father Mr. Cohen) violated the Modified Custody Order, that the father “willfully violated” the Custody Order, demanding the NC COA reset the case for trial for civil contempt.
One would be remiss in failing to note who wrote the Grissom v. Cohen opinion for the Court of Appeals, the Hon. Donna Stroud.
To say her Honor is dedicated to precision, especially in drafting Orders in civil court involving family law cases, and the associated legal standards applied at the appellate level to NC Family Law matters, is an understatement. The Grissom case, as it will likely come to be known among divorce lawyers in Charlotte and other family court jurisdictions, discusses a wide range of legal issues involving contempt of court, the burdens of proof for Show Cause Orders, the roles of family law judges, and the realities of child custody disputes.
Judge Stroud recently spoke to a Charlotte divorce lawyer seminar (continuing legal education CLE), sponsored by the Mecklenburg County Family Law section, titled, “Writing Good Orders – What Judges Want Family Law Lawyers To Know About Drafting Orders.” The Grissom v. Cohen ruling reminds family law attorneys there are important differences and distinctions between criminal contempt vs civil contempt.
Some of the more “big picture” legal issues in Grissom focus on:
- Family Court Judges in Charlotte and their duties- the “Trial Judge” has the responsibility to be the Finder of Fact. In divorce and family law disputes, the district court judge hears testimony at trials and during motions, listens to the evidence, weighs the evidence, resolving differences and conflicts in the evidence presented between the parties, and thereafter makes Findings of Fact and Conclusions of Law.
- The Appellate Courts in NC review, in family law cases, things like the appropriate Standard of Proof, Conclusions of Law, and whether the Conclusions, as a matter of law, are supported by the Findings of Fact. Generally, the Court of Appeals rules on whether legal issues or matters of contention, regarding the application of the NC Family Laws (including child custody, child support, contempt of court, etc.), were proper. Put simply, appellate courts review the application of the NC Family Laws and, when necessary, interpret the N.C.G.S. and other constitutional considerations. The Family Court Judge answers questions like, “Who gets the kids?” and “How much is child support in North Carolina?”
- The appellate courts also address technical differences between the Findings of Fact, Conclusions of Law, and the roles of the Courts. The Court of Appeals in family law cases does not review, on a de novo (“of new” or “for anew” in Latin) basis, contempt orders. They do not “re-try” the case or change legal rulings of a family law judge, even if they may have personally ruled another way. Appellate courts rule on the law, giving wide discretion to rulings by family court judges regarding factual issues, absent an abuse of discretion. Generally speaking, family court judges interpret evidence and decide factual disputes. Appellate judges look at the legal rulings, making certain the NC Family Laws are followed.
The legal standard of review in Charlotte family law cases involving contempt of court trials is whether there was competent evidence to support the Findings of Fact by the trial judge and further whether the Conclusions of Law by the Family Court judge were supported by the Findings of Fact – Bill Powers, Charlotte Divorce Lawyer
A key takeaway from the ruling is that unchallenged Findings of Fact are presumed accurate and otherwise supported by the competent evidence. That means they cannot be challenged on appeal, as they are described by family law attorneys as, “Binding on Appeal.” That is not to say the Appellate Courts of North Carolina cannot review rulings by Family Court Judges. Legal conclusions or what family law lawyers call, “Conclusions of Law” may be reviewed de novo by the NC Court of Appeals.
Call Bill Powers, Divorce Lawyer Charlotte NC NOW: 704-342-4357
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