February 20, 2024
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Equitable Distribution

Equitable Distribution

Couples who are divorcing have a lot of complicated matters to work through before they can move on with their lives. The allocation of property between the ex-spouses is a significant concern. The process known as “equitable distribution” is used to achieve this in North Carolina. With the aid of this technique, judges are able to determine the “equitable manner” in which to divide the fair market value of all of a couple’s “marital property” between the spouses.

The following few facts about equitable distribution are important to know if you are thinking about getting married or getting a divorce.

1. “Equal” Does Not Mean “Equitable”

North Carolina does not have to divide marital property equally between the parties to a divorce, in contrast to “community property” states. Although a 50/50 split is a good place to start, courts have the authority to divide the couple’s assets differently.

What constitutes an “equitable” split can be determined by a court based on a number of factors, including:

1. Pensions, retirement accounts, and deferred compensation; the length of the marriage; child custody and who should own or occupy the marital residence; each spouse’s respective income and property.

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2. Contributions made by one spouse to the other spouse’s education or career.
equitable claims or interests in property acquired during a marriage, even if only one spouse is on the title.

3. The difficulty of valuing and splitting an asset or business interest; and the contributions of a spouse to raise the value of separate property.

3. Equitable claims or interests in property acquired during a marriage, even if only one spouse is on the title

4. The difficulty of valuing and splitting an asset or business interest.

5.. The contributions of a spouse to raise the value of separate property.

2. Precise Evaluations Are Essential

All marital property must be valued at fair market value before it can be divided by the courts. They base their decision on assessments of the spouses’ respective properties. Spouses may occasionally agree on a fair market value for some types of property, but when it comes to complex or high-value assets that are more difficult to assess with accuracy, there is a greater chance of conflict. Our law firm collaborates closely with specialists who can offer precise, fact-based assessments of all kinds of complex property because of the significant financial risks involved.

3. “Fault” Doesn’t Matter

When dividing property in an equitable distribution proceeding, a court cannot take marital fault—such as adultery or domestic abuse—into account. Nevertheless, after the couple has separated, it might take into account the attempts made by one partner to mishandle, disregard, or undervalue marital property. When dividing marital property unevenly, a court will appropriately penalize a spouse who was found to have acted in such a reckless or malicious manner. Courts, on the other hand, will compensate a spouse who has protected or enhanced marital property and demonstrated financial responsibility.

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4. Property That Is Not Marital Can Become Marital Property

Although the date of marriage plays a crucial role in property classification, the process does not end there. It is possible to turn separate property into marital property. When separate property is “commingled” with marital property, this occurs. Additionally, inheritance given to a particular spouse during a marriage is regarded as that spouse’s separate property. On the other hand, if inheritance is not kept apart from marital property, it may also become marital property.

5. The Importance for Date of Marriage

Marital property and separate property are the two categories into which a married couple’s belongings are divided when they divorce. In an equitable distribution proceeding, a court can only divide marital property; it cannot touch separate property, which makes this classification crucial.

All assets obtained or earned during a marriage—between the date of the couple’s marriage and the date of their separation—are typically considered marital property. As opposed to this, separate property refers to anything that each spouse brought into the marriage and keeps to themselves alone, as well as any money earned or acquired after the parties’ date of separation.

6. Pre-nuptial Agreements

Through pre-nuptial agreements, couples can set their own conditions, defining how debts and assets will be split in the event of a divorce.

7. Tax Repercussions

The division of assets may have tax ramifications. While assessing settlement options, it is imperative to take potential tax implications into account.

8. Debts

Fair debt distribution is a component of equitable distribution. The total financial picture includes both assets and liabilities.

Other relevant factors considered in equitable distribution

  1. Each spouse’s assets, earnings, and debts
  2. Any child support or spousal maintenance from a prior union
  3. The duration of the union
  4. The age, state of mind, and physical condition of each partner
  5. A married couple’s requirement for a spouse with child custody to reside in the marital home or utilize household items
  6. The anticipation of one partner to benefit from the retirement, pension, or any other income that isn’t marital property of the other partner
  7. Whether one partner contributed directly or indirectly to the marital property while staying at home
  8. Any financial support, whether direct or indirect, that one spouse gives to the other’s education or career
  9. Any contribution one partner made to the marriage
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In order to ensure that all members of society have equitable access to opportunities and resources, equitable distribution works to reduce inequality and promote economic stability. By improving general wellbeing and encouraging a sense of shared responsibility, it helps to create a more just and sustainable community.

Frequently Asked Questions About Equitable Distribution

1. How is “equitable” distribution determined by the court?

The income of each spouse, their contributions to the marriage, the length of the marriage, and any prenuptial agreements are just a few of the variables that courts take into account.

2. What belongs to the marriage?

Although there are some exceptions, assets acquired during a marriage are usually considered marital property. Gifts and inheritances to one spouse might be considered different property.

3. Do retirement accounts have to be distributed fairly?

Yes, retirement funds accumulated during a marriage are typically divided equally among the parties as marital property.

4. Can spousal support be ordered by a court in addition to equitable distribution?

Indeed, spousal support, also known as alimony, can be ordered by courts as part of a total settlement, taking into account things like financial needs and income inequality. After the divorce is finalized, is it possible to change the equitable distribution?

In most cases, equitable distribution cannot be changed once a court issues a final decree. On the other hand, situations like fraud or notable modifications might call for a review.

5. What elements affect the distribution of equity?

The length of the marriage, the financial and non-financial contributions made by each spouse (such as homemaking), future earning potential, and the needs of any dependent children are a few examples of factors.

6. Do all assets have to be distributed fairly?

While separate property—acquired prior to marriage or through gifts or inheritance—may be excluded, marital property acquired during the marriage is typically subject to distribution.

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