Property and Debt Division in a North Carolina Divorce

How property and debts are divided when you get divorced.

It is common for a divorcing couple to decide about dividing their property and debts themselves, rather than leave it to the judge. But if a couple cannot agree, they can submit their property dispute to the Court, which will use state law to divide the property.

Division of property does not necessarily mean a physical division. Rather, the Court awards each spouse a percentage of the total value of the property. (It is illegal for either spouse to hide assets in order to shield them from property division.) Each spouse gets items whose worth adds up to his or her percentage.

Courts divide property under one of two schemes: equitable distribution or community property.

  • Equitable distribution. Assets and earnings accumulated during marriage are divided equitably (fairly). In practice, often two-thirds of the assets go to the higher wage earner and one-third to the other spouse. Equitable distribution principles are followed everywhere except the community property states listed just below.
  • Community property. In Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, all property of a married person is classified as either community property, owned equally by both spouses, or the separate property of one spouse. At divorce, community property is generally divided equally between the spouses, while each spouse keeps his or her separate property.

North Carolina is an "equitable distribution" state. This means there is a presumption of a 50-50 division of marital property, but also that when parties are unable to agree as to the division of property, property is distributed in an equitable fashion, which does not necessarily mean equal, but rather, what is fair to both parties.

How is property divided at divorce?

The Court encourages the parties to come to agreement themselves on the division of property to avoid having the Court make such decisions for the couple.

If the Court must make the decision, following are factors the court will consider in coming to an equitable determination:

  1. The income, property, and liabilities of each party at the time the division of property is to become effective;
  2. Any obligation for support arising out of a prior marriage;
  3. The duration of the marriage and the age and physical and mental health of both parties;
  4. The need of a parent with custody of a child or children of the marriage to occupy or own the marital residence and to use or own its household effects;
  5. The expectation of pension, retirement, or other deferred compensation rights that are not marital property;
  6. Any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services, or lack thereof, as a spouse, parent, wage earner or homemaker;
  7. Any direct or indirect contribution made by one spouse to help educate or develop the career potential of the other spouse;
  8. Any direct contribution to an increase in value of separate property that occurs during the course of the marriage;
  9. The liquid or non-liquid character of all marital property and divisible property;
  10. The difficulty of evaluating any component asset or any interest in a business, corporation or profession, and the economic desirability of retaining such asset or interest, intact and free from any claim or interference by the other party;
  11. The tax consequences to each party;
  12. Any other factor the court finds to be just and proper.

How do we distinguish between marital and non-marital property?

"Marital property" is all real and personal property acquired by either party during the course of the marriage and before the date of separation of the parties, and presently owned, except property determined to be separate property. Separate property means all real and personal property and any interest in personal and real property that is found to be any of the following:

  • An inheritance by one spouse during the course of the marriage
  • Any real or personal property (or interest in any real or personal or real property) acquired before the date of the marriage
  • Passive income and appreciation of items of real or personal property acquired before the date of the marriage
  • Any real or personal property (or interest in any real or personal or real property) that is excluded by a valid premarital agreement

Note that in North Carolina, a gift from one spouse to another during the marriage is presumed to be a gift to the marital unit and is, therefore, not separate property unless it is clearly stated to be separate property at the time it is given.

Who gets to live in the house during the divorce?

If children are involved, the parent who spends the most time with the kids, or provides their primary care, usually remains in the marital home with them. If you don't have children and the house is the separate property of just one spouse, that spouse has the legal right to ask the other to leave.

If, however, you don't have children and you own the house together, this question gets tricky. Neither of you has a legal right to kick the other out. You can request that the other person leave, but he or she doesn't have to. If your spouse changes the locks, or somehow prevents you from entering the home, you can call the police. The police will probably direct your spouse to open the door. When you both own the home, the only time you can get your spouse to leave is if domestic violence has been committed and a judge grants a restraining order.

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