If you are considering filing for divorce in North Carolina, or you’ve already been served with a divorce, you may have questions about property division in divorce. North Carolina uses a legal principle known as “equitable distribution” to divide marital assets and debts during divorce. The equitable division of property doesn’t necessarily mean that your assets will be divided in an equal 50/50 split.
The financial stakes regarding the division of assets during a divorce can feel high. Working with an experienced attorney can help you understand what you should expect from the property division process so you can make informed decisions. Contact Greene Wilson Crow & Smith to schedule an initial case evaluation and learn more about how our dedicated team can fight for your financial future.
Property Division
Spouses can pursue an uncontested divorce in which they agree on the major issues of their divorce alimony, including the division of property. When spouses can negotiate how they will divide their assets and debts themselves, they can draft and sign a property settlement. When the spouses have agreed to a legitimate property settlement, the family court does not need an equitable distribution order.
However, when a divorcing couple cannot agree on all of the significant issues in the divorce, the court will need to step in and make decisions regarding the contested issues. A claim for equitable distribution of property will arise when the parties cannot agree on how to divide the property on their own. The first step in property division in a divorce is to identify and value the different assets and debts.
The Three Categories of Property
There are three different categories of property: marital, divisible, and separate. Marital property includes property that one or both spouses acquired or earned during the marriage. The divisible property includes income received after the separation or marital assets or debts that change in value. Finally, separate property includes any property owned by either spouse before the marriage or acquired during the marriage through inheritance or by gift. Each party has a right to keep his or her separate property after the divorce. The marital and divisible property will be divided according to the legal principle of equitable distribution.
Determining The Value of Marital Property
Valuing the property involved in the divorce is an important step. The court will value marital property at the time of separation and value the divisible property at the time of trial. The trial could be years from the date of separation, making it important that you work with an experienced attorney who can help you prove the full value of your assets. Identifying, valuing, and equitably distributing assets is a complex process. Those with substantial property, complex assets, or who own businesses are at risk of having their assets devalued, or declassified, which could result in an unfavorable outcome. The experienced North Carolina divorce attorneys at Greene Wilson Crow & Smith are prepared to work diligently to protect your assets to the fullest extent possible during the identification and valuation process.
What Factors Are Weighted When Dividing Property in a Divorce?
Once the court determines the net value of the marital estate as of the date of separation, they will decide on how the assets and debts should be distributed. Generally, the marital assets’ net value is the property’s market value minus any debts. According to North Carolina equitable distribution laws, judges must consider multiple factors when determining an equitable property division. Some of the many factors that must consider include the following:
- The income and liabilities of each party at the time the property division would become effective
- One or both party’s individual support obligations from a previous marriage
- The needs of any child or children involved and who will be the custodial parent of that child or children
- The length of the marriage
- The age and health of each party
- The expectation of retirement benefits, which are separate property
- The efforts made by each spouse to acquire property
- Contribution of one spouse to the education of the other spouse
- Contributions that increase the value of separate property
- The liquid or non-liquid nature property
- Difficulty in valuing an interest in a business
- The tax consequences of the division of property
- The liquidity of the marital property
- Any attempts one or both parties may have made to protect or neglect the marital property
Additionally, the judge must consider other equitable distribution factors, such as one spouse’s income-earning potential, health, need to reside in the marital home with the children of the marriage, or business or unvested pension interests.
Is Marital Misconduct a Factor in Property Division?
Marital misconduct, including adultery, will not be considered in the equitable property division. If a party engaged in misconduct that economically impacted the marital estate, the judge can consider the misconduct. If you suspect that your spouse may be hiding assets or you have been the victim of domestic violence, it’s crucial to discuss your case with an attorney. Your attorney can help you pursue injunctive relief or temporary orders to protect your assets during divorce. An attorney can also help you pursue an order of protection if you have safety concerns.
The Tax Consequences of Division of Marital Property
Generally, the marital and visible property division isn’t considered a taxable event. However, if the division of property results in funds transferring from retirement plans to individual retirement accounts (IRAs) or selling marital assets to third parties, such as a family home with increased value, there could be significant tax consequences. It’s crucial that you discuss any assets that might fall into this category with your attorney so that you can be prepared for the tax consequences.
Contact an Experienced Divorce Attorney in New Bern, North Carolina
If you have trouble deciding how to divide your property, an experienced family law attorney can help you understand your options and develop a strategy to move forward. The family law attorneys at Greene Wilson Crow & Smith Understand complex property division laws in-depth. We will work with you to achieve the best outcome in your divorce case. Contact Greene Wilson Crow & Smith to schedule an initial consultation and learn more about your options.