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ASSET DIVISION
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 divorce judgment):
- 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.
For more information,
please see our page on
Asset Division.
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