A Closer Look At the Source of Assets
Because a single piece of property may be acquired over a period of time both prior to and during the parties' marriage, such as stocks in an investment account, there may be both marital and separate ownership interests in that property. North Carolina has adopted a source of funds doctrine under which both the marital and separate property receive a pro-rata and reasonable return on investment.
The courts have adopted the “source of funds” theory to distinguish between marital and separate contributions to a single asset. Under this theory, the particular asset is apportioned according to the source of funds (marital or separate) which have been used to acquire the property. This rule then has to be balanced against some of the above presumptions, such as jointly titling a house, which would make the house fully marital and not subject to the source of funds rule.
Tracking the source of funds is most often seen in retirement accounts, but the process can be applied to almost any asset. Keep in mind that the source of funds rule does not mean that the courts will consider which party paid for things during the marriage — this rule only applies to pre-marital or non-marital funds. This is an area that is often hotly contested in a divorce proceeding. If you think you have a claim that falls under the source of funds rule, make sure to consult one of our qualified equitable distribution attorneys to make sure your claim is pursued to the fullest extent possible.