Understanding Equitable Distribution in Divorce

North Carolina courts use the legal concept of “equitable distribution” to divide and distribute marital property among the spouses during a divorce. Many people mistakenly think equitable distribution means that each spouse gets half of the total assets of the parties, but equitable distribution does not mean that. In fact, it is rare for a divorcing party to receive exactly 50 percent of the assets of the couple.

This blog will provide an overview to aid you in understanding equitable distribution in divorce as North Carolina courts use this term. The distribution of property in a divorce can be quite complicated, so you might want to talk to North Carolina family law attorneys about your case.

Equitable Distribution of Separate and Marital Property

In general, courts in our state will set aside to each party their separate property and equitably distribute the marital property between the divorcing spouses. Typically, separate property includes assets that a spouse acquired before the marriage or by gift or inheritance. 

Some people unintentionally convert separate property into marital property during the marriage. For example, when a spouse owns their home before getting married and executes a quit claim deed that puts their spouse’s name on the title to the property, the house is no longer a separate property. The spouse legally gave half of the value of the house to the other spouse.

Putting cash or investments that were separate property into a joint account with one’s spouse changes those assets into marital property because the separate property got commingled with marital property. The courts will not “carve out” the previously separate property at the time of a divorce and restore it to the status of separate property. Once an asset gets commingled with a marital asset, it becomes and remains marital property.

Using separate property like an inheritance or cash saved before marriage as a down payment on a house jointly titled with one’s spouse or to improve the marital home that is jointly titled converts that previously separate property to marital property.

Equitable Property Usually Does Not Consider Marital Fault

Marital misconduct typically does not result in the innocent party getting awarded a windfall of marital property from the court. In other words, if one spouse has an affair during the marriage, that fact will not automatically mean that the court will punish the adulterous spouse by awarding a lopsided amount of marital property.

On the other hand, if the unfaithful spouse squandered a substantial amount of assets in furtherance of the affair, the court could consider that fact when determining the equitable distribution of property. Other types of misconduct by a spouse that negatively impact the finances of the couple can be factors in equitable distribution in North Carolina. For example, spending vast sums on gambling, drugs, or lavish spending can be factors. 

Other Factors North Carolina Courts Consider in Equitable Distribution of Marital Property

The courts will look at the “big picture” of the entire household when evaluating a fair distribution of assets in a divorce. Judges do not like to leave one former spouse destitute while another lives the high life. In a long-term marriage in which one party has substantial income and separate property and the other spouse has very little in their name, the courts might make an asset split that is unequal but equitable.

If one spouse has health issues that make them unable to acquire assets on their own, has custody of the children who occupy the marital residence, or contributed to the career of education of the other spouse, the court might base an unequal distribution of assets on those circumstances.You will want to work with North Carolina family law attorneys who can advocate for your position on equitable distribution in your divorce case.