Divorce & Family Law Attorneys in Western North Carolina
In the simplest terms, “equitable distribution” is the phrase used to describe the process by which a court divides up the property and debts of the divorcing parties. The general steps involved include identifying marital property and debt (property and debt subject to being divided), valuating the marital property and debt (setting a monetary value for the property and debt), and “equitably” dividing the marital property and debt between the parties. While the overall process sounds simple enough, complicated components of equitable distribution (identification, valuation and distribution) can make the process extremely challenging.
Equitable Distribution: An Overview
The process of equitably dividing the property and debt of a marriage typically starts with the long process of identifying those assets and liabilities and gathering documentation. Mortgage statements, appraisals, car loan statements, bank accounts, investment accounts, retirement statements – all must be gathered so accurate values can be determined. We then determine if an asset or liability is marital or separate, as described in more detail below.
For the purposes of an equitable distribution case (which can be separate from a divorce if the parties have separated), it does not matter in what name an asset or liability is held, as long as that asset or liability is “marital.” As long as it is marital, it goes in the preverbal “pot” to be divided.
Equitable Distribution Usually Means Equal
Upon determining all marital assets and liabilities, we examine whether an equal or unequal distribution would be equitable under the specific circumstances of the case. In most cases, an equal distribution is utilized. We then begin to attempt to balance assets and liabilities in an equal manner, attempting to give each party the asset or liability appropriate to that party. For example, if one party wishes to retain their vehicle (the one he or she normally drives), we try to award that asset and associated liability (in this example, the car loan) to that party. Again, it does not matter if the car is titled in one party’s name or the other; a transfer of title can occur during the process of equitable distribution. While the distribution is usually equal, that is not true in all cases. Claims for unequal distribution are often well-founded.
If the parties can reach an agreement as to equitable distribution, then the agreement is signed, and the parties transfer assets as needed. This can involve numerous transfers, including the transfer of cash, stock accounts, retirement accounts and real property. In many cases, one party wishes to retain the marital home. This can involve the preparation of deeds and other documents related to the transfer of real property. One challenge that can arise in this process is that while the transfer of assets can often be done easily, the transfer of liabilities can be challenging. You can transfer the title of a home with a simple deed, but you cannot transfer the mortgage from both parties into the name of only one party without the agreement of the lender. There are many possible solutions to this problem that can be utilized depending on the facts of your case. For specific questions, speak to one of our experienced family law attorneys.
While the details involved in an equitable distribution case can feel overwhelming, an experienced attorney can help you navigate these issues and secure an award that is fair and equitable under the specific facts of your case. Contact one of our family law lawyers to talk about your case today.
Valuation of Assets and Liabilities
Section 51-21, North Carolina Statutes states that, “[f]or purposes of equitable distribution, marital property shall be valued as of the date of the separation of the parties, and evidence of preseparation and postseparation occurrences or values is competent as corroborative evidence of the value of marital property as of the date of the separation of the parties. Divisible property and divisible debt shall be valued as of the date of distribution.”
Applying a date of separation value may be difficult in many cases. For example, the parties may disagree on the date of separation, or the property may substantially change in value by the time of the distribution hearing. Also, an accurate appraisal may be difficult to obtain because of lapse of time or change in the character of the property. Finally, parties may also maneuver the value of the marital estate by manipulating potential reconciliation so as to include or exclude certain property. Despite these issues, North Carolina has chosen by statute to value properties for purposes of equitable distribution on the date of separation, rather than the date on which the divorce action is filed, or the date of the equitable distribution hearing.
Property Subject to Equitable Distribution
One of the biggest challenges in an equitable distribution case is determining what property and liabilities are subject to being divided by the court. In terms of an equitable distribution case, property or debt can be marital, separate, mixed or divisible. Each of these categories is statutorily defined in source of funds rule. This rule can have a huge impact on equitable distribution as it allows the court to consider specific contributions to the marriage by one or both of the parties.
Divorce Attorneys Ready to Help Your Family
Because there are so many complexities and potential pitfalls to equitable distribution, it is important to retain an attorney experienced in family law. Identifying marital assets and liabilities, valuing assets and liabilities, and determining the exact nature of mixed assets and liabilities can be extremely challenging, even for an attorney.
Further, case law shows that most errors in family law cases that cause a case to be successfully appealed occur in the equitable distribution portion of the case. Some typical major errors in equitable distribution include:
- Failing to properly identify assets and liabilities, including contingent or undetermined assets or liabilities
- Failing to establish an admissible value for an asset or debt
- Failing to consider the tax consequences of the award of an asset or debt
- Failing to account for liquidation or carrying costs of certain assets
At The Van Winkle Law Firm, we have significant experience in all of the above legal issues and we know how to avoid all of the most common errors listed above. Our client-centered, hands-on approach allows us to work with our clients to make sure they get a full and fair equitable distribution. In those cases where it is appropriate, we vigorously pursue an unequal (but equitable) distribution. If you have questions about equitable distribution in Western North Carolina, including, Asheville, Hendersonville, Madison and surrounding communities, please contact one of our experienced family law attorneys today.