When spouses separate, they must divide the marital estate through a process called equitable distribution. North Carolina law presumes an equal division of the assets and debts is equitable. But certain factors can overcome this presumption, making an unequal division of assets and debts equitable.
To order an unequal distribution, a judge must find (based on the evidence presented at trial) that an equal distribution is not equitable. The judge will look at the factors set out in N.C. Gen. Stat. §50-20(c) to make that determination. To obtain an unequal distribution, you must present evidence to support at least one of the factors. However, judges have broad discretion in this area—so even if you present enough evidence, it may not be enough to sway their opinion. Even so, if only one factor from the list in N.C. Gen. Stat. §50-20(c) applies, it could be enough to support an order for an unequal distribution of the marital estate.
The factors of N.C. Gen. Statute §50-20(c) that can support an unequal distribution of the marital property include:
The income, liabilities, and property of each spouse at the time of the division of property.
Income includes the earning potential of the spouses. And if one spouse brings in more income than the other, a judge can take that into account. Separate property, like professional licenses and inheritances, can affect the division of assets as well. Likewise, separate debt and obligations such as attorneys’ fees and child support for a child outside of the marriage can affect the judges’ decision.
Any obligation for support arising out of a prior marriage.
This includes alimony or other obligations stemming from a prior marriage.
The duration of the marriage, the age of the spouses, and the physical and mental health of the spouses.
How long the marriage lasted can influence the distribution of property. Additionally, a disabled or mentally ill spouse can make the case they need an unequal distribution of the assets—or at least an award of the marital residence.
The need of a parent with custody of the spouses’ children to live in or own the marital residence and to use or own its household effects.
If the children have lived in the marital residence their entire lives and attend school nearby, the judge could decide to award the house and some or all of the household effects to the spouse with primary custody.
The expectation of pension, retirement, or other deferred compensation rights that are not marital property.
If one of the spouses has a separate pension, retirement, or other account, this could affect the distribution of the marital property.
Any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of marital property by the spouse not having title, including joint efforts or expenditures and contributions and services, or lack thereof, as a spouse, parent, wage earner or homemaker.
This factor only applies if one of the spouses owns property in their sole name and the other has claim to it through contributions made to the marriage (usually if they stayed home and took care of the house or kids).
Any direct or indirect contribution made by one spouse to help educate or develop the career potential of the other spouse.
The court can consider any support given by one spouse while the other worked on obtaining a higher education. This can include (among other things) direct, out-of-pocket expenses or putting your career on hold to take care of the kids. But if the nonstudent spouse benefits from the student spouse’s education for several years, the argument for an unequal distribution will not be as strong.
Any direct contribution to an increase in value of separate property which occurs during the marriage.
A professional license is considered separate property, so a judge could potentially consider any assistance one spouse gives to the other to obtain the license.
The liquid or nonliquid character of all marital property and divisible property.
When considering the division of the marital estate, courts don’t need to make an equal distribution of liquid assets. Meaning, if there is $25K in the joint bank account and $25K in one spouse’s IRA, the court could award that spouse the full amount in their IRA and the other spouse the full amount in the joint bank account. However, if a court orders one spouse to pay a distributive award to the other spouse, the court should consider whether the spouse ordered to pay the award has enough liquid assets to do it.
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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 spouse.
The courts are free to keep businesses intact and to take that into account when dividing the assets.
The tax consequences to each spouse, including those federal and State tax consequences that would have been incurred if the marital and divisible property had been sold or liquidated on the date of valuation.
If a spouse would like the court to consider the tax consequences, they must present evidence at trial. Additionally, if a sale isn’t likely, the court doesn’t have to consider the tax consequences.
Acts of either spouse to maintain, preserve, develop, or expand; or to waste, neglect, devalue or convert the marital property or divisible property, or both, during the period after separation of the parties and before the time of distribution.
When a marital asset increases or decreases in value due to a spouse’s actions, the court can treat this as a distributional factor. Similarly, if a spouse maintains an asset like the marital residence and keeps it up but does so for the spouse’s use and benefit of the asset, the court can consider this as a distributional factor. Lastly, if an asset is depleted by a spouse during the marriage, the court can consider this when dividing the property.
In the event of the death of either spouse prior to the entry of any order for the distribution of property, the court may look at the following factors:
- Property passing to the surviving spouse by will or through intestacy due to the death of a spouse
- Property held as tenants by the entirety or as joint tenants with rights of survivorship passing to the surviving spouse due to the death of a spouse
- Property passing to the surviving spouse from life insurance, individual retirement accounts, pension or profit-sharing plans, any private or governmental retirement plan or annuity of which the decedent controlled the designation of beneficiary (excluding any benefits under the federal social security system), or any other retirement accounts or contracts, due to the death of a spouse
- The surviving spouse’s right to claim an “elective share” pursuant to G.S. 30-3.1 through G.S. 30-33, unless otherwise waived.
Any other factor which the court finds to be just and proper.
In the past, the court found that when one spouse used their separate property to buy a car for the other spouse, make a down payment on the marital residence, and establish an IRA for the other spouse, this was a just and proper reason to divide the marital estate unequally.
As you can see, dividing the marital estate can be complicated, especially if you’d like an unequal share of the marital property. It’s best to speak with an attorney to discuss your claim for an unequal share and the legal strategy to help give you the best chance of success. Contact our office today to schedule an appointment with one of our knowledgeable family law attorneys. They have over 30 years of combined experience helping spouses separate their assets and debts. They are more than happy to help you through the process too.
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