Are school loans marital debt?

Family court judges are charged with the responsibility of categorizing assets and debts, determining their value, and distributing them in a fair, equitable manner.

That’s how Equitable Distribution works in North Carolina.

And while that may seem rather straightforward or even obvious, such matters can be deceptively complex.

Married couples going through a divorce regularly dispute the value of houses, retirement accounts, and other assets as of the date of separation.

The other side of the coin involves the apportionment of debt, which may include things bank loans, mortgages, and even student loans.

And like real estate and other things of value that may be subject to repayment of a debt, assuming such debt was encumbered during the period of marriage, the Court must consider the “joint benefit” of the degree to the parties.

What is an education worth?

There are some general rules regarding Marital Debt in North Carolina and who bears the Burden of Proof to prove what is marital debt vs. separate (individual) debt.

The NC Divorce Laws, both under the Equitable Distribution statute and appellate court case law require:

• The party alleging debt is “marital” bears the Burden of Proof
• That includes proving the amount of the debt and debt value as of the date of legal separation
• AND that any such debt was undertaken for the joint benefit of the respective parties

There is also a balancing process of sorts.

If the Family Court Judge is to classify debts associated with student loans, there must be evidence the marriage lasted long enough for the parties to the marriage to “substantially enjoy” the benefit of obtaining the degree, which normally would be associated with improved earning capacity.

That may seem a bit nebulous if not downright confusing.  Calculations regarding the value of an asset or debt may be relatively straightforward, based on hard numbers on bank statements and student loan records.

Figuring out how that could serve as a future benefit to either or both parties, while subject to the rules of production of evidence, is a bit more discretionary.  That’s not unusual.  In family court and legal issues involving Equitable Distribution, there are many, many issues left to the sound discretion of the court.

Are gifts Marital Property? 

As long as the Court (the District Court Judges) does not abuse her or his discretion in making legal rulings, they will not be overruled.  The Appellate Courts will not overturn ED rulings unless the Judge abuses their discretion or otherwise rules inconsistent with their Findings of Fact.

The Judge’s ruling on ED (Equitable Distribution) is followed, unless there is an obvious, clear abuse of discretion – Bill Powers, Charlotte Divorce Lawyer 

Reversing the Court’s ruling is an incredibly difficult thing to do.  The appellate court would have to find the entry of judgment (the legal ruling) is not supported by reason.  It would also have to be shown that the Judge’s decision was not the natural consequence of or the result of a “competent inquiry.”

Otherwise, it would have to be shown that the Judge did not comply with the NC Family Law statutes, thus resulting in an abuse of discretion.  

What is considered as part of Equitable Distribution?

There is a three-step process mandated under the Family Law statutes.  The Judge is required to:

• Classify
• Value
• Distribute

That applies to both assets and debts of the parties.  Classification involves determining who owns what.  That means answering the question, “What is a marital asset (or debt) and what is separate property (property owned by the individual people involved)?”

There actually is another type of property to consider, which is referred to as divisible property.  

Debt associated with the marriage, which is also known as “marital debt” involves debts that are incurred during the period of the marriage and prior to the date of separation.  Such taking on of debt must have been for the “joint benefit” of the spouses.

The moving party (the party trying to prove the debt is “marital”) has the legal duty to prove first the value of the debt at the date of separation and that the debt was incurred for the benefit of both parties, jointly.

Are school loans “Marital Debt?”

Additional education and degrees are not technically property that can be divided.  At the same time, loans incurred for education during the period of marriage may be considered marital debt.  The court must also consider whether both parties to the marriage are expected to share in the rewards of a degree or education.

Student loans may be deemed marital, even if the funds are not specifically used for education alone.  As such, traditional education expenses regarding tuition, books, lab fees, etc., may be deemed marital debt.

Furthermore, student loans used to pay bills, buy groceries, and even pay for the costs of childcare may also be deemed a marital debt.  That’s true also for expenses associated with travel and maintenance of the household to the benefit of the marriage overall.

The moving party (the spouse seeking to have debts classified as “marital”) must present evidence regarding the marriage and whether it lasted long enough both parties to “enjoy the benefits of the degree or higher earnings.”

Does it matter whether money is kept is separate accounts?

Maintaining separate bank or savings accounts while married is not necessarily determinative of the debt/asset classification.  It is relevant for the court to consider.

Whether the debt or asset is kept in the name of both or even just one of the spouses is not the sole, determinative factor.  The Court, in its Findings of Fact and Conclusions of Law, is required to consider in the totality of circumstances the evidence presented.

It frankly can be a complicated process.  Figuring out how long means “long enough” to “enjoy the benefits” of education is not necessarily formulaic or an exact science.

If you have questions about this or how the Equitable Distribution laws in North Carolina work, please call NOW: 704-342-4357

Amazon Bezos World’s Richest Man After Divorce?

Will Jeff Bezos still be the “worlds richest man” after getting divorced?  Maybe.  A lot depends on whether Bezos and his wife executed a contract that is often referred to as a Prenup or Pre-Nuptial agreement.

Of course, Jeff Bezos may not have been the world’s richest man in the first place.  It’s likely he was a part of the world’s richest couple.

All the money earned at Amazon probably isn’t “his.”  Instead, it’s reasonable to assume the billions from Amazon is theirs.

That’s because wealth accumulated during the period of marriage is often considered part of the marital estate, at least that would be the case under the NC divorce laws.

Without some form of agreement to the contrary, Bezos likely only ever owned 1/2 of the reported 137+ billion dollars – Bill Powers, Divorce Lawyer Charlotte NC 

Indeed, some might say the term “world’s richest man” engenders a hint of sexism.  President Trump purportedly said of Bezos, “I wish him luck, it’s going to be a beauty.”

It assumes wealth earned by the man is his and anything “given” to the wife, as part of a divorce or Equitable Distribution, was his to lose.

If marriage is truly a union where “two become one,” it’s a good idea to consider the fact that if you own a 1/2 interest in an asset, you are only ever entitled to 1/2 the value of that asset, if that.

Marital estates with substantial value (real property, bank accounts, and income), where those assets were obtained during the period of marriage and not treated as separate or individual property, are often divvied up straight down the middle.

Yet, under the NC divorce laws, you’d remiss in assuming “equitable” means “equal” in every instance.

In fact, an equitable distribution may very well result in one party to the marriage getting a larger percentage of the marital assets after careful consideration of a series of different factors.

What is Equitable Distribution in NC?

The etymology of the word “equity” comes from the Latin term aequitatem, which means “equal, impartial, and fair.”  Under the laws setting forth the manner of determining equitable distribution in NC, equity does not necessarily mean 1/2. 

In fact, what a Family Court Judge determines to be equitable could be anything but uniformity, equality, or symmetry.  The Court must consider big picture things such as:

• Amount of money at hand
  • Bank Accounts
  • Checking / Savings
  • Liquid Assets
• Prior marital estates
  • Settlements and support requirements
• Relative infirmity of one spouse
• Housing needs
• Deferred income
  • Income Due
  • Profit Plans / Vested Interests
• Retirement Accounts
  • 401K
  • SEP-IRA

The specifics of Equitable Distribution are set forth in the NC General Statutes in N.C.G.S 50-20.  The process includes three general steps or CVD:  Classification, Valuation, and Distribution.

What is Marital Property?

If an asset is classified as “separate” or an individual asset belonging only to one spouse in the marriage, its value often isn’t quite as contentious.  That’s because assets determined to be separate property are not Marital Property and therefore not subject to equitable distribution.

While Courts must consider individual separate property in determining things like Alimony in North Carolina, if found to be the possession of one party and not the marital estate, ED simply does not apply – Bill Powers, Divorce Attorney Charlotte NC

The process of figuring out what is marital property vs a separate or individual asset falls within the duty of the Court to classify property.  Part of that may also include an assessment of what is divisible property.

NC Equitable Distribution Laws

Divisible property is a way to work through fluctuations in the value of marital property, both good and bad.  Divisible property involves increases (and decreases) in the value of the marital property that occur after the date of formal separation but prior to the formal distribution of assets.

“Property” may or may not specifically relate to real estate.  Divisible property may involve increases and decreases in value to houses and real estate, retirement accounts, and even things like precious metals or jewelry.

Once the asset is “classified,” the next step is to determine the value of that asset.  Thereafter, the Court Orders the distribution of the asset.  That may involve writing a check or transferring title to cars and houses or handing over personal items.

It sounds simple enough, that is until you disagree whether you intended something of value to remain yours, and yours alone, and not part of the marital estate.  And as you might understand, the value of things commonly is a source of disagreement.

Powers Law Firm PA – Divorce Lawyers Charlotte NC

If you have questions about how the divorce laws may affect you or whether Equitable Distribution in NC includes gifts from family or an inheritance, give us a ring.  We’re here to help.

You may reach Bill Powers by email:  Bill@CarolinaAttorneys.com

**Unlike criminal defense matters and/or those involving DVPO Domestic Violence Protective Orders, consultation fees may apply.  Our law firm charges hourly rates for divorce and family law legal representation.

Custody Over the Family Pet

Who gets Fido?

You might be surprised what causes hang-ups in separations and divorce.  Sometimes even deciding whether to separate involves consideration of factors that may seem unimportant, if not frivolous to some.

The other side of the coin involves assumptions about what’s fair or what the divorce laws in North Carolina say.

If you’re a pet owner, figuring out who gets the dog in a divorce (or cat or any other beloved pet) can turn out to be a big deal.  You may have even waited to split up, fearful you’d be separated from an animal that is very much considered a member of the family.

Generally speaking, pets are considered property.  They are not subject to ‘best-interests’ considerations like children.  And that can cause problems – Bill Powers, Charlotte Divorce Lawyer

You can replace a car, the couch, or a home with another one, but you cannot replace the bond that you have created with your pet with the snap of your fingers or with a quick credit card transaction.  For many folks, the family pet is a member of the family.

They’re more than property.

Indeed, given almost 70%  of homes in the United States have at least one pet, it’s surprising there aren’t more disputes and protracted litigation in family court about pet custody issues.

Property division can be one of the most hotly contested aspects of divorce.  Adding pets into the equation only complicates the matter.  That’s one reason why proceed forward in a collaborative law fashion may be helpful.

Unfortunately, unlike child custody, the court treats pets as property.  There aren’t “pet custody laws” in North Carolina.  There isn’t a consideration of what is in the best interests of the pet.

As property, dogs and cats (pets) are considered as part of Equitable Distribution.  That means the Judge goes through and decides:

• What is a marital asset?
• What is separate property?
• What is the property worth?
• What’s fair in splitting up marital assets?

Is a Pet Separate Property or Marital Property?

Because the court views pet animals as property, your dog, fish, cat, or pet snake may fall under the category of marital property or personal property.  The division of assets, which necessarily includes real and personal property, is done so through the NC Equitable Distribution laws.

Personal property normally includes anything that either party brought into the marriage, or, more simply, anything that was purchased or acquired before the marriage.  That is not an absolute rule.

In fact, there is some legal authority to argue the assumption that individual “separate” property is gifted to the marriage or otherwise becomes marital property over time.  There are exceptions.  Frankly, it can be a bit complicated.

“Separate Property” may include things like an inheritance or gifts that were given specifically to one or the other spouse.

Pets are Property

According to the Animal Legal Defense Fund, some courts are looking at the bond between the animal and the owner to establish custody or ownership.

Equitable Distribution Affidavit 

Proving that the bond between you and your pet is stronger than the bond between your pet and the other owner may be accomplished in court by showing who provided more care, who took the pet to more veterinarian visits, who took the animal on more walks, etc.

Eyewitnesses, such as neighbors and friends, as well as receipts and other documentation, can be utilized for the purpose of proving a strong bond. If you do not wish to put everything in the hands of the court, you and your ex-spouse may wish to work out a sharing schedule or contract between the two of you that specifically outlines who has the pet on specific days, weeks, or months.

Charlotte Equitable Distribution Lawyers

Whether you are seeking ownership of your dog, cat, or guinea pig, the Charlotte divorce attorneys of Powers Law Firm PA understand the importance of the bond that you have with your beloved pet.

Our lawyers are available for legal consultation for separation and divorce matters in Charlotte (Mecklenburg County) and Mooresville (Iredell County).

Legal matters involving separation, divorce, and equitable distribution are subject to a consultation fee.  Matters discussed and disclosed to our divorce lawyers as part of legal representation (and consultations) is confidential.