Property Division/Equitable Distribution: Who Gets What? Dividing Your Property Fairly
A “marital estate” commences on the date of marriage with a beginning value of zero. The estate immediately begins growing by the accumulation of assets and earnings by either spouse or both spouses jointly. Debts incurred by either spouse or both spouses jointly after marriage will generally diminish the value of the marital estate.
The marital estate abruptly stops growing on the date of separation (not the date of divorce). The process of dividing the assets accumulated by either or both spouses between the date of marriage and the date of separation, and the debts incurred after the date of marriage and still owed on the date of separation by either or both spouses, is called making an "equitable distribution," or property division, of the assets and debts.
The court must perform three steps to complete equitable distribution. First, property must be identified and classified. Second, the marital property must be valued. Finally, the court must determine a fair property division of the marital property. The laws governing equitable distribution can be quite complex with many exceptions to the rule and exceptions to the exceptions.
Generally speaking, there are three classifications of property, and the court can divide two of those classes in equitable distribution (marital and divisible).
"Marital property" means all property currently owned which was acquired by either or both spouses during the marriage and before the date of separation, unless the property was inherited or was given to only one spouse by a third person. An asset titled in only one spouse’s name may, and very likely is, still marital property unless already owned on the date of marriage. Gifts given by one spouse to the other spouse during marriage generally are marital property. Marital property often includes retirement benefits and other deferred compensation rights “earned" during the marriage as well as military pensions eligible under applicable federal laws.
"Separate property" includes all property a spouse brought to the marriage, property inherited by either spouse during the marriage, and gifts given to either spouse individually by a third party. However, sometimes a marital interest can be created in separate property if either or both spouses use marital funds or efforts during the marriage to increase the value of otherwise separate property.
“Divisible property" is a classification of property that can derive from marital property following separation and prior to division. The easiest example of divisible property is passive interest accumulating on a bank account. The balance in the bank account on the date of separation is marital property subject to division. The interest accumulated on the balance after separation and until the date of division is divisible property which is subject to division by the court.
Unless spouses can agree on property division, marital and divisible property will be divided by the court. There is a presumption that a 50/50 division of the total net value of the estate (assets minus debts) is fair. “Fault” is generally not considered a factor in determining the percentage of property each spouse should receive, although the court may consider financial misconduct by a spouse that causes marital assets to be wasted, damaged, or destroyed.
We'll Ensure a Fair Property Division to You
At Clemmons Family Law, we know equitable distribution is often the most confusing aspect of divorce and that a fair result is essential to your financial future moving forward. Contact us today to schedule a consultation and discuss your property division. Call us by phone at 336-766-2222 or email us at firstname.lastname@example.org.