North Carolina Divorce: Dividing Property

Here are the rules on dividing property during a divorce in North Carolina.

If you are getting divorced in North Carolina, you need to know what property you get to keep and what you have to split with your spouse, as well as who will be responsible for your marital debts. 

Equitable Division

North Carolina is an equitable distribution state. This means that the court will divide your property in a way that is equitable, meaning that it must be fair. The court must begin the process by presuming that it is equitable to split the marital and divisible property equally. The law recognizes, however, that there are circumstances where an equal distribution would be unfair. To determine whether that is the case in your divorce, the court will apply a set of factors to evaluate the past efforts and future needs of both spouses. Ultimately, the result must be a just division--even if it is unbalanced.

The court’s involvement assumes that the spouses could not resolve their property disputes on their own. Throughout the divorce process, you will have opportunities to work with your spouse to decide on a division that suits both of you. The court will usually accept a written agreement that details the spouses’ preference. It is only where you could not reach a compromise with your spouse that the court will step in and divide your property for you.

Division of Marital and Divisible Property

Before the court can divide your property, it must characterize it as marital, divisible, or separate. These distinctions are important because your separate property remains free from division. At divorce, the court divides only the marital and divisible property.  

  • Marital property is all property acquired or earned during the marriage up until the date of separation. Pensions, retirement benefits, and other deferred compensation rights earned during marriage are also marital property. The court will presume that all property acquired during marriage and before separation is marital property.
  • The court uses the divisible property category to catch any change in the value of marital property that happens between the date of separation and distribution. It includes any money or property that one or both spouses earned during marriage, but did not realize until after separation – like a bonus or commission. It could also be an interest payment or dividend issued from a marital bank or stock account. Changes in debt (like an increased finance charge) during this after-separation period also fall into this category if the spouses incurred the obligation during marriage. The court will exclude, however, any appreciation or dissipation of property that results from something a spouse did after separation. You can’t make your spouse pay half of your gambling debt if you went to the casinos the day after separation, for instance. That’s your separate obligation.
  • Separate property is property you actively gain or lose after separation and any property that you owned before marriage. It can include property you received during marriage, but only if that property was intended for you alone – like a gift, an inheritance, or a professional license – or acquired by exchange of your separate property. For example, if you had a beach cottage before marriage that you sold during marriage in exchange for a duplex that you kept as a rental property, then the duplex remains your separate property. Likewise, the rents from the duplex and any increase in its value are yours to keep.  

The most common types of property divided at divorce are real property like the family home, personal property like jewelry, and intangible property like income, dividends, benefits, and debts. At divorce, debts are treated the same as any other property. Before dividing a debt, the judge will have to characterize it as either marital, divisible, or separate based on when it was acquired, who acquired it, and how it was used. If the debt can’t be excluded from division as the separate liability of either spouse, then the court will split it equally between the spouses or apply the factors below to assign responsibility for it.

Factors Considered in Dividing Property

From a starting point of equal division, the court will consider several factors to split the marital and divisible property equitably. Among these factors include the spouses’ ages, health, income, assets, and liabilities. The court will also look at the length of the marriage, the liquidity of the marital property (cash being the most liquid asset while stocks are among the least liquid), and how each spouse contributed to the marital property or dissipated marital assets. Contributions as a homemaker count the same as any monetary-based efforts, and you have a greater chance of keeping the family home – or at least the right to live in it – if you have custody of the children. Additionally, the court will consider tax consequences and any other factor that’s just and proper.

Causing the marriage to fail by having an affair or otherwise behaving badly does not, on its own, count against you in the property division. It is a factor for alimony, however, and your spouse may receive a larger share of the property if you wasted assets when carrying out your affair or other bad act.

Marital Misconduct Considered for Alimony

Although having an affair – an act prohibited by the law as “marital misconduct” – has little impact in how the court divides the marital and divisible property, it is decisive for alimony. Alimony is a payment from one spouse to the other to help the dependent spouse maintain a lifestyle as close as possible to the one enjoyed during marriage. In North Carolina, you can’t get alimony if you had an affair. Likewise, if you were unfaithful you will have to pay if your spouse requests alimony, unless your spouse was unfaithful too. In that case, it’s up to the court whether to award it.

In the absence of marital misconduct, the court will determine a request for alimony based on many of the same factors as the property division. Other factors include the dependent spouse's level of education and whether that spouse contributed to the supporting spouse’s education and earning power during marriage. The court has wide discretion in deciding how much alimony should be paid, for how long, and the manner of payments. Nonetheless, any order to pay alimony must be reasonable in light of the dependent spouse's needs and the supporting spouse’s ability to pay.

Sources

You can read the law on division of property and alimony in the North Carolina General Statutes Sections 50-20 and 50-16.3, respectively. Subsection 50.16.1(A)(3) of these same statutes lists all of the bad acts that fall under “marital misconduct.”

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