In North Carolina, property acquired during a marriage is usually considered to be jointly owned by husband and wife. When a couple divorces, that property needs to be divided fairly. In order to do this, the property needs to be classified as marital or separate, valued, and then distributed. Each step of this process is littered with potential problems.
Classification of property means that a determination is made whether something is marital or separate. How something is classified will determine how it will be divided or if it will be divided at all. Some things are usually easy to classify, such as a house or a car purchased by the parties during the marriage. Sometimes, however, this can get very difficult. For example, a home owned by one party before the marriage is usually considered separate property. But what if one party owned a house prior to marriage, but the other party paid the mortgage and helped remodel the house during the marriage? Is one spouse entitled to some of the value they helped create in that house? Determining how much those contributions helped increase the value of that separate property can be a tough task. Figuring out how to divide retirement accounts that were started before the marriage but increased in value during the marriage is another common and complex problem. Determining what property is part of a marital estate is just one of the questions you’ll have to face in equitable distribution.
Valuing property is another deceptively complex problem that needs to be addressed. While some things are straightforward—such as a savings account—others can be tough. Is it worth getting a professional appraiser to value a vacation property? How do you value a business? What is a pension worth? How about a time share? Valuation can be costly, complex and time-consuming and you’ll need help in determining the best way to go about it.
Finally, there is the most difficult question to answer: How do you distribute all the property? The favored method is to distribute in-kind, which is to say trade assets back and forth so that the total value for each person in as close to equal as possible. However, this can’t always be done. In some cases, neither person can afford to keep the marital residence and it has to be sold. Dividing a 401k or IRA requires some analysis of the tax consequences and may require a special court order to split it up. Closely-held businesses usually can’t be sold and some sort of buyout arrangement must often be created.
The Palmé Law Firm in Raleigh can help you with the complex issues of equitable distribution, from determining what to do with your home or business to dividing retirement accounts and investments. Contact our lawyers for an initial consultation.