If you are considering filing for divorce in North Carolina, or you are currently separated from your spouse and are waiting to file, you’re probably worried about financial or property losses you may incur. Understanding how North Carolina laws dictate how to divide assets in a divorce can give you a better understanding of what you can expect and plan for your future. Our divorce lawyers in Pinehurst, NC are sharing a look at equitable distribution as well as tips on asset protection and strategies to protect what’s yours.
Understanding Equitable Distribution in North Carolina
In North Carolina, if the terms of your divorce (such as child custody, spousal support, or, in this case, property division) are decided by a judge, they will divide property based on the premise of equitable distribution. Outlined in the North Carolina General Statute 50-20, distribution of marital and divisible property is defined as “the court shall determine what is the marital property and divisible property and shall provide for an equitable distribution of the marital property and divisible property between the parties in accordance with this section.” There are also things that can be used as evidence in a divorce trial that can help or hurt your case.
Separate vs Marital Property vs Divisible Property
Anything the court deems separate property is not part of the property distribution and specifically belongs to the spouse who owns it. Separate property includes all real and personal property acquired by a spouse before their marriage or was given to them as an inheritance or a gift during the marriage. However, property given as a gift from the other spouse, such as an anniversary gift, is only considered separate property if an intention is stated in the conveyance.
Marital property includes any and all real and personal property acquired by either or both spouses during the marriage and prior to the date of separation. This includes a house, car, savings accounts, valuables, furnishings, and even retirement accounts, pensions, and business holdings.
Divisible property refers to specific assets and property obtained during the separation agreement but before the date of distribution. This includes appreciation or loss of value to marital property, passive income received from marital property, or property that was acquired due to efforts undertaken during the separation, such as bonuses, commissions, or contractual rights.
Factors to Consider in Property Division
It’s important to note that “equitable” does not necessarily mean equal. In NCGS 50-20 (c) the law states, “There shall be an equal division by using net value of marital property and net value of divisible property unless the court determines that an equal division is not equitable. If the court determines that an equal division is not equitable, the court shall divide the marital property and divisible property equitably.”
Basically, this means that the court divides property fairly, not necessarily 50-50, considering multiple factors, including:
- Income, property, and liabilities of either party
- Obligation for child support or spousal support from a previous marriage
- Duration of the marriage
- Age, physical health, and mental health of both spouses
- Any deferred compensation, such as pension or retirement accounts that are not considered marital property
- Earning potential
- Direct or indirect contribution a spouse made to help educate or advance the earning potential of the other spouse
- Direct contribution to increase in value to a separate property owned by the other spouse.
- Custodial parent’s ability to raise the child or occupy the marital residence
For example, if one spouse was a homemaker for 15 years, they will most likely have a significantly lower earning potential than the other spouse, so a judge would take that into consideration. However, if they also have significant independent funds or property that is deemed separate from the marital property, that would also be a factor. It’s important to note that marital behavior, such as infidelity, is not used to determine who gets what.
Dividing Assets Outside of Court
If you are concerned about how a judge will divide property, it may be helpful to try and negotiate property distribution outside of court with your spouse and both of your divorce attorneys. Through negotiation, both spouses can work together to create a mutually beneficial arrangement. For example, one party may want the marital home and to get that will give up rights to any pension, retirement, or investment accounts they may have a rightful claim to. This empowers both parties to take ownership of the process rather than leaving it in the hands of a judge.
Asset Protection Strategies During a Divorce
Before and during your divorce, you want to do as much as you can to be in a financially solid place after the divorce is finalized. To help you with asset protection, follow these tips:
Inventory All Assets and Debts
You need to know exactly how much money or debt there is and where it is. Understand and get clarification on what kind and how much debt there is as some couples are required to share debt repayment as well as what kind and where your assets are.
Decide What You Want and Need
If you choose to negotiate a settlement, it’s important to focus on your highest priorities rather than trying to get as much as you can. Knowing what you need to start out your new life after divorce and set up a stable future is essential and could play a key role in choosing what to negotiate for. For example, instead of trying to secure artwork or electronics, would a car be more advantageous to you after the divorce?
Separate Bank Accounts
As soon as you separate, make sure you open up a separate checking and savings account to protect your money. You can also withdraw money from your joint account, but no more than half, to put in your separate account. However, it’s important that if your spouse has custody of the kids, you provide them with an appropriate amount to live on and let them know of your actions. A judge will look on this more favorably than abruptly withdrawing all the money out of a joint account.
Change Your Will and Beneficiaries
One step of asset protection people often forget about when divorcing is their estate documents and finances. If you have life insurance or a will, make sure you update it to reflect where any money and assets go, such as your children, a sibling, a friend, or a parent.
Schedule a Free Consultation with a Divorce Lawyer in Pinehurst, NC Today
If you are divorcing your partner, it’s important to have legal representation to help you negotiate an agreement, file paperwork, and even litigate on your behalf. Our divorce attorneys have the experience and dedication necessary to secure fair outcomes for our clients and will work hard to ensure you are positioned for a secure and confident future after divorce. Call us today at 910-295-2525 or fill out the form below to get started.