North Carolina has Equitable Distribution to handle property and debts. Equitable Distribution is the statutory cause of action established to govern the division of property, financial assets and debts between spouses who have separated.

As a general rule, equitable distribution provides that each spouse will receive half of the net total (value of all properties and financial assets minus the total amount of debt) of properties, debts, and financial assets, but the law does provide for instances when one spouse receives a larger amount than the other spouse. Because it is not simple, or in some cases even possible, to divide certain assets, spouses can sometimes receive “distributive” awards instead of property. Distributive awards are monetary awards equivalent to the receiving spouse’s share of the marital estate.

One of the main concerns for most homeowners going through a separation or divorce is not only determining where one lives but determining who receives the marital home, who pays for the marital home, whether the marital home should be sold and how to divide the equity / value, profit (from the sale) or debt (from the sale) of the home. There are many instances in which we can help a spouse keep the home so that the client and children can have some sense of normalcy during this difficult time.

Marital debts are also divided evenly between both parties, but like property and financial assets, one party can be given a greater share of the debt due to certain factors. Regardless of which spouse has his or her name attached to the debt, if the debt was incurred during the marriage, it is most likely considered marital debt (with some exceptions). Just like assets and property, debts are factored into the net value of the marital estate, and it’s important to consult with an attorney immediately to determine who is responsible for each debt and/or obtain orders from the court regarding payment of debts so that you can protect your credit.

While the general rule – and legal presumption – is that each spouse receives half of the net value of all property, assets and debt (combined), the courts can give one spouse a greater share of the net marital assets. There are twelve separate factors courts use to determine whether a party should receive an unequal share of the marital assets. Three of the most frequent reasons spouses receive a larger portion are (1) the other spouse having a greater earning potential, (2) the other spouse having more assets in his/her name as a result of having large amounts of separate property (property that was owned prior to marriage, inherited, or derived as a result of property / assets the spouse owned before marriage) and/or (3) tax consequences. Unlike Alimony or Post Separation Support, a spouse’s “marital fault” cannot stop a spouse from receiving his or her share of marital assets in equitable distribution, but a spouse’s efforts to waste, neglect, devalue or convert the marital property or divisible property during the period after separation of the parties and before the time of distribution can be grounds for a court to reduce the offending party’s distribution.

Because so many of our clients are military personnel or spouses, we pay special attention to military issues in asset division (along with custody and spousal support). Military retirements, Thrift Savings Plans (TSP’s), and accrued leave are divided in the equitable distribution process along with the non-military property, debts, and assets. Many have the common misconception that the parties need to be married for ten years for a spouse to have property rights in the other spouse’s military retirement, accrued leave, or TSP, but this is false. Ten years is only relevant to how the spouse’s portion is paid (whether from the service member or from the military). If the parties were not together for ten years, the non-military spouse can still receive his or her share of the servicemember’s retirement, TSP or accrued leave.