Equitable distribution is a legal process for determining how to divide assets between divorcing parties. For help with marital property distribution cases, call North Carolina family law attorney Larry Hudspeth at (910) 455-9921.
The interpretation is not literal. The division of assets and debts is not precisely in half between the divorcing spouses. Instead, equitable distribution implies dividing the property fairly. A spouse can request the distribution of more than half of the property to them based on the determining statutory factors.
According to the equitable distribution concept, one spouse may end up with more than the other after the divorce if the judge considers it fair. An imbalance in the parties’ educational achievement and employability is among the factors that could make distribution unequal. Other factors considered here include how much each earns or spends, how much each needs financially, and how old each is.
The forward-looking asset division approach considers the financial welfare of the parties after the divorce.
Other factors that inform equitable distribution include:
The duration of marriage has a significant impact on the distribution of the marital estate. Longer marriage usually means a more sizeable value of the marital property. Contrarily, if the marriage ended not long after it began, there may not be much to divide. Apart from the lower value of marital property due to the short duration of the marriage, other factors justifying an unequal distribution may also play an important role.
A higher income for one or both spouses means their chances to support themselves independently are greater. When one of the spouses has a lower income than the other, the equal distribution of marital property could affect them negatively. The possibilities of fulfilling basic life needs or maintaining the lifestyle they enjoyed during the marriage will be reduced. When dividing marital property, it is vital to consider all circumstances, including the property and income of each spouse.
Age and health are decisive in property distribution. Division of marital property depends on these factors. The deteriorating health of one spouse can indicate their need for financial support. Health treatments result in considerable costs, which may justify an unequal distribution of marital property for a spouse experiencing health issues. That also applies to age as a determining factor in marital property division. However, there are no strict criteria on who will get more than half of the assets when it comes to age. In case of an age difference, a younger spouse can have more needs to satisfy, and therefore they may require more assets. On the other hand, an older spouse is at greater health risk, which justifies unequal distribution.
Alimony (spousal support) means that the spouse with a higher income pays a certain amount of money to the other spouse with a lower income or no income. The purpose of alimony is to support the other spouse in meeting their basic needs or maintaining the lifestyle they enjoyed before the divorce. In the context of marital property distribution, alimony plays an important role. The spouse receiving alimony should not get unfair treatment in the property division. In other words, if the lower-income spouse receives less than half of the marital assets, that may compromise the purpose of the alimony.
The courts pay special attention to the contribution of each spouse to the marriage and household. Sometimes the judge can measure such contribution (earning a specific amount). On the other hand, unemployed spouses (most frequently wives) contribute to the household by investing significant time and energy in raising children and performing other house jobs. The employed partner would not have been capable of earning a salary without the other spouse’s care for the children and home.
In close connection with the previous factor, the support provided by either spouse to the career or educational opportunities is decisive. Child care and household support are vital. Increased earning potential depends on those sacrifices, justifying the unequal distribution of marital property.
The equitablel distribution of marital property depends on the economic circumstances of each spouse, which is directly dependent on the liquidity of their assets. Assets with no ready market make valuation and division difficult for the court. Contrarily, a savings account is a liquid asset that is accessible and useable.
The judge should consider the tax consequences because they may result in an unequal division. One of the spouses may end with heavier tax ramifications regarding the assets they received.
Among other factors affecting the marital distribution, the courts consider the desirability of retaining the family home, which is particularly important in cases involving child custody. The intentional destruction or waste of marital property will have the opposite effect in distributing the marital property.
Before finalizing the divorce, a spouse must file a claim for equitable distribution to ensure that they receive a fair distribution of assets. The outcome boils down to the liquidation of the marital estate in a way the court deems equitable.
No matter who filed for the divorce, the asset division process is the same. Further, marital misconduct has little to do with the division of the assets unless there is gross financial misconduct.
Mediation is mandated before the court hears the issue of equitable distribution. Parties may select their mediator if they can agree on one. A judge will appoint a mediator if the parties cannot agree on one.
The parties reach an agreement about the division of assets and liabilities if the mediation is successful. Both parties will then sign the written contract. After settling, the mediator notifies the court, and the agreed-on asset division formula becomes enforceable as a court order.
While requesting equitable distribution, parties often have to bring financial affidavits to the mediation or a hearing. Your lawyer can help create an equitable distribution affidavit that lists:
After separation and divorce, many people often end up in financial hardship. It doesn’t have to be that way. If you want to protect your rights to a fair division of marital assets and debts, consulting with an experienced attorney is essential.