When equitable distribution may not be equal distribution

In our last post, we talked about the North Carolina law that allows for equitable distribution of property in divorces. What exactly does an equitable (fair) division or property mean, and how does it differ from equal division? How does a judge determine what is equitable? Today we examine how equitable distribution works in practice.

As we discussed in a recent post, a spouse must file a timely request for equitable distribution in order for the court to follow this method of property division. Once this request is submitted, a court hearing will be scheduled to decide how to fairly allocate marital property. At the hearing, each spouse can testify and provide evidence about their property and its value.

The judge will then make a decision on how to divvy up the property using the following process:

1. Identify which property is marital property.
2. Assign a value to each piece of marital property.
3. Decide which way to divide the property is “fair”. Is it fair to do a 50/50 split, or is another method fair?
4. Sum together all of the property together and allocate specific property to each person.

It’s worth examining step 3 above in further detail. What conditions might influence a judge to opt for an unequal distribution of property? According to the Equitable Distribution Act, there are 12 factors that may be considered:

1. Each spouse’s property, debt and earnings
2. Obligations from a previous marriage (e.g., child support, alimony)
3. The health of each spouse and the length of the marriage
4. Primary custody: whether the parent caring for the children has a right to the marital home
5. Any retirement or deferred compensation benefits that are expected
6. A spouse’s contribution to acquiring marital property for which they are not listed on the title
7. A spouse’s contribution to the career or education of the other spouse
8. A spouse’s contribution to the increased value of the other spouse’s property
9. The relative liquidity of any marital property
10. The understanding that it is difficult and undesirable to value and divide an interest in a business, corporation or profession
11. The tax consequences for each spouse
12. Efforts by a spouse to maintain and develop or, alternatively, to waste and neglect marital property during the time between separation and the divorce judgment.

Understanding the considerations that go into determining equitable distribution can inform your testimony at the hearing.