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If you have decided to divorce and you’ve been married for any length of time, one of the issues you’ll almost certainly have to address is how to divide the property that you and your spouse have accumulated during your marriage. Most couples have joint accounts, a shared home, insurance policies, car payments – the list could go on and on. You may wonder how a court will divide that property, and what you can expect as you move forward in this process.
In North Carolina, courts divide process using principles of equitable distribution. Let’s take a closer look together at what equitable distribution means and how the courts put it into practice.
What Does “Equitable Distribution” Mean?
Different states use different methods to divide and distribute property during a divorce. In North Carolina, courts use a method called equitable distribution. As you may know, the word “equitable” means fair or just.
It’s important to understand that in a North Carolina divorce court, “fair” and “just” don’t always mean an even 50-50 split, right down the middle. Instead, it means that courts will look at the entire picture of a marriage before deciding how to divide property in a divorce. It will do this by dividing the property into separate categories, and then considering a wide variety of factors as it seeks to determine what is fair.
How Do North Carolina Courts Characterize Property?
Before deciding how to divide the property equitably, a North Carolina judge will first review a couple’s assets and debts, dividing them into three primary categories. Often, courts will use worksheets known as “equitable distribution worksheets” to help with this process.
In North Carolina, property is divided into three primary categories. They include:
- Separate: This is property that belongs only to one spouse, and not jointly to the couple. It may include property that one spouse owned separately before the marriage, and which remained separate through the duration of the marriage. This may include a home that one spouse owned outright and retained in a deed solely in that spouse’s name. In other cases, it may include an inheritance or gift given only to one spouse and never deposited jointly in a marital account. As a general rule, if property remained separate throughout the marriage, it will continue to be the property of that spouse after the divorce.
- Marital: Marital property is, as it sounds, property that was acquired and held jointly by both spouses during the marriage. It typically includes the marital home, all jointly held accounts, the parties’ personal property, vehicles, insurance policies, jointly managed businesses, and more. If property is marital property, the court will seek to divide it equitably between the parties in the divorce.
- Divisible: Divisible property refers to property that has changed in value after the date of the separation, but before the divorce itself. Unlike marital property, which is valued as of the time of the separation, divisible property is typically valued at the time of trial. Some examples include changes in the value of the marital home, interest accrued on jointly held loans, income from rental properties, and more.
After the court has reviewed all of the property at issue and divided it into these three categories, it will be ready to consider the circumstances and the character of the property and make what it believes is an equitable division. When a court attempts to do that, it will consider a variety of factors.
What Factors Does a Court Consider in Dividing Property?
When dividing property fairly and equitably, a court will consider a wide range of factors, depending on the circumstances. They include:
- Financial status of each party: As it attempts to divide the property fairly, the court will consider each spouse’s income, future earning potential, separate assets and debts, and any other factors it deems relevant.
- Age and health of each spouse: The ages of each spouse are important considerations in property division, as are mental and physical health. Typically, if one spouse is considerably older than the other and thus less likely to be able to work and earn an income for as long as the other spouse, this may be taken into consideration. Likewise, if one spouse struggles with a significant physical or mental illness, that will be considered by the court in terms of the spouse’s ability to provide for their own needs and those of any children of the marriage.
- Marital misconduct: North Carolina, like all other states, is a “no-fault” divorce state. While this means that fault will not be taken into account for purposes of getting the divorce itself, it doesn’t mean that marital misconduct will be disregarded entirely. In fact, it is well within a judge’s discretion to consider misconduct when addressing a variety of issues, including property division. As only one of many potential examples, one spouse struggled with a gambling addiction and spent an excessive amount on that addiction, which may be considered in the division of property.
- Contributions to the marriage: In attempting to divide property fairly, a court will consider the “contributions” to the marriage made by each party. Sometimes, for example, one spouse may have worked to put the other spouse through medical school, law school, or some other type of training – and then later was a stay-at-home parent for more than a decade. In that case, the spouse who earned the advanced degree may earn significantly more, but the contributions of the non-earning spouse will be taken into account to balance the division of assets between the parties.
- Employable skills of each party: North Carolina courts also often look at the “employable skills” of each party. They may consider education, physical abilities, specialized training each spouse has received, and other factors in determining each spouse’s earning potential now and in the future.
- Any other factors the court wants to consider.
In considering these and other factors, a court seeks a thorough understanding of the circumstances of the marriage so it can make a decision it believes is fair.
After considering all of the factors that it believes are relevant, the court will enter an order setting forth the manner in which the property is to be divided. Once this order is entered, both parties must comply with it. Failing to do so could result in contempt, which may carry a variety of penalties. If the parties later wish to modify the order, they must seek modification from the court. They cannot change or alter the order on their own.