In the United States, divorcing parties, depending on their state of residence, are subject to equitable distribution or community property rules as it relates to the division of their property. Most states adhere to equitable distribution standards while a minority of states observes community property rules.
Community Property States
Community property encompasses assets that were acquired during the marriage, but excluding gifts and inheritances. Community property does not consider the named owner on the title of the property. It only takes into consideration that the property was acquired during the marriage thus included in the “marital community.” A minority of states adheres to community property rules during divorce proceedings including Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, Arizona, California and Alaska (by agreement).
Equitable Distribution States
In an equitable distribution state, assets and earnings that are acquired during the marriage are divided equally at divorce. This mechanism is termed “equitable” because the means by which property division occurs is deemed “fair.” Under equitable distribution, the property acquired by both parties during the marriage is likely separated between the two parties, while property acquired before marriage or acquired by one party is usually distributed to the party with ownership. Therefore, a house bought by both parties during the marriage, a joint bank account and a jointly owned small business can be classified as marital property for the purposes of property distribution. Property owned by the parties is presumed as marital property unless it falls under the definition of separate property. In addition, if the court finds one party guilty of fault (i.e., adultery, abandonment, cruelty), the court may order one party to receive less than the equal share of the marital property. Even in this instance, although not equal, the distribution is deemed fair. North Carolina is an equitable distribution state.
Equitable Distribution in North Carolina
North Carolina adheres to equitable distribution rules of property distribution. In North Carolina, once marital property is classified, the court divides the property between both parties. However, the inquiry does not stop at identifying the marital property. North Carolina has promulgated twelve factors for which the court must analyze to determine the most equitable division. The factors include (§ 50-20):
- Income, property, liabilities of each party
- Any obligation of support from a prior marriage
- Duration of the marriage and the age and physical health of both parties
- Need for custodial parent to occupy or own marital residence
- Any expectation of pension, retirement rights that are not marital property
- Direct or indirect contributions made by one spouse for the education or development of the other
- Any direct contribution to an increase of value in separate property during the marriage
- Tax consequences of transferring property
North Carolina Divorce Attorneys
The attorneys at Powers Landreth PLLC have represented and advised clients on equitable distribution matters for many years. We have substantial knowledge in transactional and court processes as it relates to marital property distribution and we will aggressively represent you in your case. Contact us now for a consultation.