The divorce process is designed to fairly value and distribute
marital assets, and address other financial implications including
child support and alimony. Many matters are resolved through
effective negotiation and agreements between husbands and wives.
However, when matters cannot be amicably resolved, litigation
becomes a necessary part of divorce. Divorce has many personal and
financial challenges, but with a clear understanding of the law
and your options, you will be able to make informed decisions that
address your needs – now and in the future.
Marital property is defined as all assets acquired during the
marriage and prior to separation (with certain exceptions). Debt
can also be marital property and subject to division. All marital
property is subject to distribution between the marital partners.
Many couples resolve asset division without court intervention by
developing a property settlement agreement. However, if spouses
cannot agree on the issue of property distribution, then it
becomes necessary for the court to intervene. North Carolina’s
“Equitable Distribution of Marital Assets” statutes empower
the court to divide all marital assets (including real and
personal property) and debts. It is important to note that the
rights to equitable distribution are not automatic and must be
specifically claimed by one or both spouses.
Equitable distribution is basically a three step process that
can take place prior to the final divorce decree or after (if you
have preserved your rights by filing your claim before the the
- Identification and Classification recognizes and
categorizes property as marital and or separate. Separate
property is owned prior to marriage, or inherited property or
gifts. In a number of situations, a dual classification of a
property item may occur.
- Valuation assigns a fair market value to each property item.
Fair market value is the amount that a willing buyer would pay
a willing seller.
- Distribution of the marital property is equally divided
between parties, unless facts demonstrate that equal
distribution would be unfair.
There are several factors that the court considers in equitable
distribution of assets, including: income, debt, property of each
spouse; prior marital support obligations; duration of the
marriage; age and health of each partner; needs of the custodial
parent; contributions of one spouse to the education of another;
and retirement and pensions. To ensure the preservation of assets
until equitable distribution, the court may enter an injunction to
prevent the transfer, depletion or hiding of assets.
Divorce is an emotionally draining process where spouses are
sometimes competing for financial resources. A number of spouses
agree to the division of their assets and are divorced without
ever understanding what they’ve given up. Many partners accept
financial terms in the hopes of expediting the divorce process,
only to find themselves in financial crisis sometime in the
future. It is important to understand there may be hidden assets
and assess the "real" value of the marital estate and
business interests. Divorcing spouses are typically unprepared to
objectively consider settlement offers, counter offers and other
complexities associated with different types of investments.
You can protect yourself by collecting as much financial
information as possible, including bank accounts, stock options,
deferred compensation plans, real estate, brokerage accounts,
foreign accounts, offshore trusts and deferred tax planning
devices that can be difficult to sort out and assess. If you and
your spouse are in litigation over equitable distribution, your
attorney has the ability to discover your spouse's assets.
Understanding the comprehensive picture of your marital
finances is critical to negotiating the best possible financial
terms and standard of living. If you believe that your spouse may
be transferring joint assets out of your name, hiding assets, or
if your spouse has hired a lawyer, it is especially important that
you have expert legal representation.
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