When spouses separate and divorce in North Carolina, one of the issues that must be resolved is the division of property and debt acquired during the marriage that still exists when the spouses move apart from one another.
Equitable Distribution in North Carolina
North Carolina is an “equitable distribution” state, which means the marital estate will be divided between the spouses in a fair and equitable way. The marital assets consist of all the property (e.g., residences, retirement, bank accounts, vehicles, business interests, furnishings) acquired by either spouse or by the spouses jointly between the date of marriage and the date of the physical separation.
Likewise, debts that exist at the time of separation – such as, credit card balances, mortgages, equity lines and vehicle loans – that were incurred for the joint benefit of the parties are also equitably divided.
Sometimes there are exceptions to what is considered marital property. For example, inheritances and gifts from third parties received during the marriage may be deemed the separate property of one spouse and therefore are not subject to division. In addition, if a spouse brings assets to the marriage that still exist and can be identified on the date of separation, those assets remain his or her separate property (with certain exceptions).
An equal division of the net marital estate (assets minus debts) is presumed to be equitable, or fair. Various factors can be considered if one party thinks that the marital estate should not be divided equally, but most of the time, both in court and in private settlements, an equal division is the end result.
In addition, an “in kind” division is preferred, which means that each spouse receives assets and debts of approximately equal value (rather than forcing a sale of all assets or requiring one party to pay the other party money in exchange for the assets).