Are Your Marital Assets and Debt Being Divided Fairly?

getting a fair deal

Marital Assets and debts Get Divided by a process called equitable distribution

If you’re getting divorced in North Carolina, it’s important to understand what property you will get to keep and what you will have to split with your spouse, as well as who will be responsible for your marital debts.

Marital Property Laws In A Divorce

Property distribution in North Carolina is referred to as equitable distribution. The court (unless the parties have reached a negotiated agreement) will divide the property owned by you and your spouse. It is important to remember that in North Carolina you must have a claim for equitable distribution pending on the date and absolute divorce is granted or your rights to an equitable distribution of your property will be gone.

There are three (3) types of property, which are involved, in the Equitable Distribution Process.

“Separate property” includes all property owned by either spouse before the marriage, property acquired during the marriage by one spouse by inheritance or gift from a third party and property acquired after the date of separation with post-separation earnings. A gift from one spouse to the other during the marriage is marital property unless the donor states at the time of the conveyance that it is intended to be separate property

“Marital Property” includes all property presently owned that was acquired during the marriage except property determined to be “separate property”. “Marital property” includes all vested pension and retirement benefits.

“Divisible Property” is defined as real and personal property that also includes the appreciation and decrease in value of marital property acquired as a result of actions of the parties during the marriage but before separation. Passive income from marital property received after separation and increases in marital debt including finance charges and interest related to marital debt is subject to division by the Court.

During the equitable distribution process, a court may distribute property prior to entering a final judgment. The court can make an “interim distribution” of property which means the court can upon proper motion by either party, distribute to one party certain items of property they request unless good cause is shown that such a distribution should not be made.

Normally an equal division of Marital Property is considered to be fair and equitable. There are thirteen (13) statutory factors the court must consider in deciding whether an equal division is appropriate in your case. These factors are:

  1. Income, property and debts of a party;
  2. Support obligations from prior marriages;
  3. Length of marriage and age and health of each party;
  4. Needs of custodial spouse to own or to possess the marital home and household effects;
  5. Expectation of retirement benefits which are separate property;
  6. Efforts made by each spouse to acquire property;
  7. Contributions of one spouse to the education of the other;
  8. Direct contributions that increase the value of separate property;
  9. Liquid or non-liquid nature of property;
  10. Difficulty in valuing interest in a business;
  11. Tax consequences to each party;
  12. Actions taken by either party to preserve or waste marital assets; and
  13. Other factors the court finds to be relevant.

If your equitable distribution case goes to litigation (i.e., a complaint is filed), then the first party to file the equitable distribution claim must serve an inventory affidavit on the opposing side. The opposing side has 30 days to file a responsive inventory affidavit. The affidavit must:

  1. List items of marital property
  2. List items of separate property
  3. Give the estimated date of separation value.

The law specifically provides that these affidavits shall be subject to amendment and “shall not be binding at trial as to completeness or value.”

Separate Property will be kept by the spouse who owned it prior to marriage while marital property will be divided between the parties by the court. There is no a precise formula for dividing the property, but there is a strong tendency in North Carolina to divide the property equally.

Marital misconduct such as adultery is NOT considered in the settlement of property rights as it is in an action for Alimony.



Date of Marriage – is critical because the court can only divide marital property, while it cannot touch separate property in an equitable distribution proceeding. Marital property is generally everything acquired or earned during —between the date of a couple’s marriage and the date of their separation.

Separate Property – is everything that each spouse brought into a marriage, which remains in the sole ownership of each respective spouse, or property earned or acquired after the parties’ date of separation. Separate property can be converted into marital property when property is “commingled” with marital property. Inheritance can also be converted into marital property if it is not kept separate from marital property.

“Equitable” – Does Not Mean “Equal”, in North Carolina while a 50/50 split is a starting point, courts are given the discretion to make an unequal split and consider factors, such as:

  • respective income and property of each spouse; duration of the marriage; child custody and who should own or occupy the marital residence; pensions, retirement accounts, and deferred compensation; contributions of a spouse to the education or career of the other spouse; contributions of a spouse to increase the value of separate property; equitable claims or interests in property acquired during a marriage, even if only one spouse is on the title; and the complexity of appraising and dividing an asset or business interest.

“Fault” – is Not a Factor, a court cannot consider marital fault (i.e. adultery, domestic violence) when it divides the property but could consider the efforts a spouse has made to waste, neglect, or devalue marital property after the couple has separated.

Accurate Appraisals –  are critical because courts are tasked with determining the fair market value of all marital property before dividing it. They do so based on appraisals of property provided by the spouses but there can be conflict when it comes to complex or high-value assets.