Fayetteville Equitable Distribution Lawyer
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What Happens To Our Property And Debts When The Marriage Ends?
Equitable Distribution refers to the division of marital property and debts in North Carolina, and at Gary Britt Law, I understand that Equitable Distribution is often a complex and emotionally charged legal matter that can significantly impact your life now and in the future. That is why I take the time to listen to your concerns, answer your questions, and provide objective, direct, and personalized legal services to you.
I have extensive experience in handling Equitable Distribution cases and other family law matters in Fayetteville and surrounding areas whether it be in Cumberland County or one of the surrounding counties such as Hoke, Robeson, Harnett, or Sampson. I have helped countless clients in Fayetteville and the surrounding areas navigate this process. I have the experience and knowledge to help you achieve your goals and protect your financial well-being.
One of the unique challenges of Equitable Distribution for personnel stationed at Fort Bragg / Fort Liberty is understanding the nuances of a “military divorce.” As someone who has represented military servicemembers and their families throughout my career, I have first-hand knowledge of the complexities of military issues in divorce and equitable distribution, and at Gary Britt Law, I am well-equipped to help you navigate this process while keeping in mind the unique challenges and circumstances of military life.
How Does Equitable Distribution Classify Properties/Assets Or Debts? What Is The Difference Between Separate And Marital Property And Debts?
Marital Property and Debts
Marital property includes all assets and debts that you and your spouse accumulated during your marriage, from the date of marriage up to the date of separation. This typically encompasses items such as the marital home, cars, furniture, savings, investments, retirement accounts, credit card debts, and mortgages. Both tangible and intangible assets count, regardless of whose name is on the title.
The critical thing to understand is that marital property is subject to equitable distribution in North Carolina, which means it will be divided fairly between both parties in a divorce. Fair does not always mean equal, though – the court will consider various factors to reach a just result. As your attorney, I work to ensure your interests are fully represented in this division.
Divisible Property and Debts
Divisible property refers to changes in the value of marital property, and earnings, accumulations, and transactions that occur after the date of separation but before the final distribution by the court. This could include interest on marital investments, dividends, bonuses, increases in pension or retirement benefits, and passive income from marital assets.
Divisible debts, on the other hand, include finance charges and interest on marital debts accrued after the date of separation. The court includes divisible property and debts when determining the overall distribution of assets and debts.
Separate Property and Debts
Separate property is what you or your spouse owned before the marriage or received during the marriage by inheritance or gift from a third party (not including gifts from the other spouse). It also includes any property that was acquired in exchange for separate property or the increase in value and income from separate property, provided it was not due to the efforts of the other spouse.
Separate debts are those incurred before the marriage or after the date of separation. They also include debts explicitly tied to separate property or debts incurred by a spouse for purposes totally unrelated to the marriage.
Significantly, separate property is not subject to equitable distribution – it remains the property of the spouse who owns it. However, it is not always straightforward to keep separate and marital property distinct, particularly in long marriages. One party having significantly more or less separate property can be considered when dividing the marital property and debts, and there can be instances where separate property becomes marital property, a process known as “transmutation.” I can help ensure that your separate property is accurately identified and protected.
Understanding and Classifying Property
The process of classifying property and debts in a divorce can be complex and requires a deep understanding of North Carolina’s laws. There are times when property may have both marital and separate components, such as a business started before marriage that grew significantly during the marriage, or a house owned before marriage that became the marital home.
As an experienced family law attorney, I am here to help you understand these categories and how they apply to your situation. I will guide you through the process of identifying, classifying, and valuing your property, ensuring that your rights and interests are safeguarded throughout your equitable distribution case.
Whether you have questions about marital property, divisible property, separate property, or how debts are handled in North Carolina’s equitable distribution cases, reach out to Gary Britt Law. Together, we can navigate this complex process and work towards a fair and equitable outcome.
What Is The Process For Equitable Distribution Cases?
The Filing Process
The equitable distribution process begins with filing a claim for equitable distribution via a new lawsuit or via counterclaim or motion in existing actions where permitted, but these claims must always be filed before the absolute divorce is granted (whether the divorce is granted in North Carolina or another state). This involves preparing and submitting the appropriate to the court requesting the equitable distribution of marital property. It is critical to get this right because errors in filing could result in you losing your ability to protect your financial rights, which is why it is important to have an experienced family law attorney involved at every step.
Temporary Restraining Orders and Injunctions
During the equitable distribution process, there might be a need for temporary restraining orders or injunctions. These are legal orders that prevent either spouse from selling, transferring, or otherwise disposing of marital property during the divorce proceedings. This ensures that assets are not diminished or hidden before they can be properly divided.
Interim Distributions
There can be times when waiting for the entire divorce process to conclude before distributing property is not feasible or fair. In such cases, the court may order an interim distribution, which means some assets are divided ahead of the final resolution.
The Discovery Process
Discovery is a crucial part of the equitable distribution process. It is the time when both spouses disclose all of their assets and debts. Full transparency is necessary here. You need to share information about bank accounts, real estate, pensions, retirement accounts, businesses, and all other assets, as well as all debts. Be prepared to gather and provide extensive financial documentation.
Valuation Process
The valuation process helps to determine the monetary value of each marital asset. Some assets, like bank accounts and stocks, are fairly straightforward to value. But others, such as real property, businesses, pensions, and retirement accounts, require more involved processes.
Business Valuation
Valuing a business for equitable distribution involves a careful analysis of the company’s financial statements, market conditions, and more. It may also require the expertise of business appraisers or financial experts. We will ensure the business is accurately assessed to ensure a fair distribution.
Pension and Retirement Account Valuation
Like businesses, pensions and retirement accounts are complex assets that require professional valuation. Different types of retirement accounts can have different rules for distribution in a divorce. If you or your spouse have a pension or retirement account, we will work to ensure it is properly valued and considered in the equitable distribution process.
Military Retirement Division
In cases where one spouse has military retirement benefits, it is important to understand how these can be divided in a divorce. The Uniformed Services Former Spouses’ Protection Act provides a framework for this. I have the expertise to navigate these regulations and ensure that military retirement benefits are fairly distributed.
Real Property
In North Carolina, real property’s value in a divorce is determined based on its fair market value at the date of separation, often evaluated by professional appraisers. The amount of any associated debt, such as a mortgage, is deducted from this value to establish the net marital value for distribution. The court then determines how to divide the property and its debts, considering various factors, including each spouse’s income, assets, and ability to pay.
Equitable Distribution Inventory Affidavits
An Equitable Distribution Inventory Affidavit (EDIA) is a document that lists all the assets and debts subject to distribution. Both parties need to fill out an EDIA as part of the discovery process. This document helps the court see a clear picture of the marital estate and aids in the division process, and at Gary Britt Law, I will be there to help you with the preparation of this crucial document.
Mediation Process
Before going to trial, couples often try to reach an agreement through mediation. During this process, a neutral third party helps the spouses negotiate the division of assets and debts. As your lawyer, I can guide you through this process, advocating for your interests and helping you strive for a fair outcome.
Trial Process
If mediation does not result in an agreement and the parties remain unable to resolve their issues via an agreement or settlement, the case will go to trial. In court, a judge will consider all the evidence, hear from both parties, and make a binding decision about the distribution of assets and debts. I am experienced in representing clients in these proceedings, and I will fight for your rights and interests in court.
Factors For Equitable Distribution
1. Income, Property, and Liabilities at the Time of Division
The first factor involves examining each party’s income, property, and liabilities when the division of property becomes effective. This can impact the division decision as it helps to illustrate the financial standing and obligations of each party.
2. Support Obligations from Prior Marriages
The court considers whether either spouse has any support obligations arising from previous marriages. Such obligations can influence the financial resources of the party, potentially affecting the distribution.
3. Duration of Marriage and the Health and Age of Both Parties
Longer marriages may result in more intertwined finances and thus, can potentially lead to a more equal distribution. The age and health of each party can also impact the division, particularly if one party has greater financial needs due to health issues.
4. Needs of a Custodial Parent
If one party has custody of a child or children from the marriage, the court could consider the custodial parent’s need to occupy or own the marital residence and household effects. This could influence whether they receive a greater share of these assets.
5. Expected Pension or Retirement Rights
Any expected pension, retirement, or other deferred compensation rights that are not marital property are also considered. This provides a fuller picture of each party’s future financial circumstances.
6. Equitable Claims to / Interests in / Contributions to Marital Property
The court will look at each party’s contributions to enhancing/increasing the value of the marital estate’s property and obtaining marital property, whether financial or otherwise. This includes joint efforts or expenditures and financial or “in kind” (i.e., via non-monetary efforts such as labor) contributions to marital property.
7. Contributions to the Other Spouse’s Education or Career
If one spouse contributed to the education or career development of the other, this could be considered in the distribution. This reflects the fact that the benefiting spouse may now have an enhanced earning capacity.
8. Contributions to an Increase in Value of Separate Property
Any contribution that led to an increase in the value of separate property during the marriage is also a factor. This acknowledges the efforts of a spouse that may have supported the financial growth of the other by contributing the increase in value of the other spouse’s separate property.
9. Liquid or Nonliquid Character of Property
The nature of the property, whether it is easily convertible to cash or not, is also a factor. This helps to ensure that each party receives a mix of assets that suits the spouse’s needs and circumstances.
10. Difficulty in Evaluating Certain Assets
If certain assets, such as interests in a business or profession, are difficult to evaluate or would be economically beneficial to keep intact, the court takes this into account. This helps to preserve the value of these complex assets.
11. Tax Consequences
The court will also consider the tax implications for each party if the marital and divisible property were to be sold or liquidated. This factor can significantly affect the net benefit each party receives from the distribution.
11a. Actions Taken Regarding the Property Post-Separation
The court examines the actions of each party in relation to the marital property after separation. This includes efforts to maintain, preserve, develop, expand, waste, neglect, devalue, or convert the property.
11b. Property Considerations in the Event of a Spouse’s Death
If a spouse passes away before property distribution is ordered, the court considers property passed to the surviving spouse by will or intestacy, joint tenant property, proceeds from life insurance or retirement accounts, and the right to claim an “elective share.”
12. Any Other Just and Proper Factor
Finally, the court retains the discretion to consider any other factor it deems relevant to ensure a just and proper distribution. This allows for flexibility in addressing any unique circumstances that may arise in individual cases.
Understanding these factors and their potential impact on the division of marital property is crucial in navigating the equitable distribution process in North Carolina. As an experienced family law attorney, I can help you understand these factors and their implications in your case. At Gary Britt Law, I will work tirelessly to ensure that you always have the knowledge and guidance needed to receive the fair and equitable distribution of your marital assets that you deserve.
More About Temporary Restraining Orders And Preliminary Injunctions In Equitable Distribution Cases
In Equitable Distribution cases, parties often seek to obtain temporary restraining orders (TROs) and preliminary injunctions as a means of protection during the legal process. These court orders can be powerful tools in helping to preserve assets and prevent further harm after the parties separate but before the parties’ property issues are resolved. While temporary restraining orders and preliminary injunctions are not just similar but interrelated, there are key differences between the two, and it is important to understand how they can be used in North Carolina equitable distribution cases.
What is a Temporary Restraining Order (TRO)?
A Temporary Restraining Order (TRO) is a type of court order that is intended to keep things the same (“as is”) and prevent harm or further harm from occurring during the pendency of a legal dispute before a hearing on a longer injunction can be held. A TRO is usually granted for a short period of time, usually up to 10 days, and can be issued without notice or with short notice (as in hours) to the opposing party. To obtain a TRO, the party seeking the order must demonstrate that immediate and irreparable harm will occur if the TRO is not granted. This harm must be serious and not able to be repaired or adequately compensated through other legal remedies.
A TRO is an initial, short-term step taken before a hearing to obtain a preliminary injunction that keeps the protections (like those from the TRO) in place until the entirety of Equitable Distribution issues are resolved.
What is a Preliminary Injunction?
A Preliminary Injunction is a type of court order that is intended to preserve the status quo and prevent harm or further harm from occurring during the pendency of a legal dispute. Unlike a TRO, a preliminary injunction requires notice to the opposing party and a hearing in front of a judge, and these hearings often occur within ten days following issuance of a TRO. To obtain a preliminary injunction, the party seeking the injunction must demonstrate that there is a substantial likelihood of success on the merits of the case, that irreparable harm will occur if the injunction is not granted, and that the balance of equities favors the party seeking the injunction.
The Difference Between a TRO and Preliminary Injunction
The main difference between a TRO and a preliminary injunction is the process by which they are obtained. A TRO can be granted without notice to the opposing party (or with unusually short notice, as in two hours or notice instead of the normal five or more days) and is intended to be a short-term remedy. A preliminary injunction, on the other hand, requires notice and a hearing and is intended to be a longer-term remedy that remains in place until the case is resolved. Additionally, the standard for obtaining a preliminary injunction is higher than that for obtaining a TRO. To obtain a preliminary injunction, the party seeking the order must demonstrate a substantial likelihood of success on the merits of the case.
How Can Temporary Restraining Orders and Preliminary Injunctions be Used in North Carolina Equitable Distribution Cases?
In North Carolina equitable distribution cases, TROs and preliminary injunctions can be used to protect assets and prevent further harm during the legal process. For example, if one party is dissipating (i.e., selling off, hiding, spending/wasting away, being negligent, etc.) assets or engaging in other harmful behavior, a TRO and/or preliminary injunction can be obtained to prevent further harm and preserve the status quo.
Different Districts Have Different Rules
It is important to note that different districts in North Carolina may have different local rules regarding the use of TROs and preliminary injunctions in equitable distribution cases. It is essential to have an attorney who is experienced and knowledgeable in dealing with the rules of local districts and the judges in those districts. An experienced attorney will be able to navigate the local rules and procedures and provide effective representation in court.
More About Pensions, Investments And Retirement Plans
In North Carolina, vested and non-vested pensions, retirement benefits, investment plans and deferred compensation rights earned during the marriage are typically considered marital property. That means they are subject to equitable distribution. It includes pensions, 401(k) plans, IRA accounts, profit-sharing plans, executive deferred compensation plans, military pensions, and social security.
When it comes to the distribution of these assets, several factors come into play. First and foremost, the length of the marriage is considered along with the spousal contributions to these plans. Another factor is whether the spousal benefits were accrued before, during, or after the period of the marriage. A thorough review of the plan rules and stipulations is key to understanding how they may affect your case.
If you are in the process of separating or considering divorce, it is vital to inventory all financial assets as soon as possible. Make sure you have the most recent statements and understand the basic plan rules. Also, it will save you time and money by going ahead and checking with your plan administrator whether the plan has a standard Qualified Domestic Relations Order (QDRO) it requires. A QDRO is a legal document that grants a spouse or former spouse the right to a portion of the benefits under a retirement plan, and many plans – if not most – have specific language that they require for a QDRO.
It is key to understand how these assets are valued. It can be quite complex due to fluctuating values and the nature of the specific plan. Defined contribution plans, like a 401(k), are relatively straightforward to value based on the account balance. On the other hand, defined benefit plans, such as traditional pensions, might require actuarial analysis to determine the present value.
One key point to remember is that these assets are not automatically divided equally. The court considers several factors, as outlined in NC Gen Stat 50-20(c). Factors include each spouse’s income, property, and liabilities; direct or indirect contributions made by one spouse to help educate or develop the career potential of the other; the need of the parent with custody of the children to occupy or own the marital home; tax consequences; acts of either party to maintain, preserve, develop, or expand; or to waste, neglect, devalue or convert such marital property, among others.
When dividing retirement assets, it is essential to consider potential tax implications. Certain withdrawals can trigger a taxable event or penalties if not handled correctly. Therefore, it is essential to work with an attorney and financial advisor familiar with these issues.
More About Military Retirement Division
North Carolina is a state known for its rich military history and a high concentration of active and retired service members. A unique facet of living here, particularly for military couples, is understanding how military retirements are divided in Equitable Division proceedings, and I wanted to explain the specific formula and process for dividing military retirements and discuss relevant terms like the Survivor Benefit Plan (SBP), direct pay, disposable and non-disposable retired pay, Concurrent Retirement and Disability Pay (CRDP), and Combat Related Special Compensation (CRSC).
Navigating through a military divorce in North Carolina requires a thorough understanding of how military retirements are divided. It necessitates grappling with SBP, direct pay, disposable and non-disposable retired pay, CRDP, and CRSC, each of which plays a crucial role in how assets are split. Due to the intricacies of both state and federal law in these cases, seeking professional legal advice is highly recommended to ensure a fair and equitable division of military retirement assets.
Through understanding the information outlined above, we hope that you will be better prepared to navigate the complexities of your case. However, remember that every situation is unique, and the general principles detailed here may not apply to all situations. It is always advisable to seek professional legal advice to fully understand your rights and obligations in a military divorce in North Carolina.
Dividing Military Retirements in North Carolina: The Basics
Military retirements are considered marital property in North Carolina, subject to division in divorce proceedings under our Equitable Distribution laws. For service members and their spouses, the division of military retirement pay can often be a complex issue, as it involves both state and federal laws.
In North Carolina, the value of the military retirement is based on a “coverture fraction.” The numerator of the fraction is the total number of months the couple was married while the servicemember was in the military, and the denominator is the total number of months of the servicemember’s military service. This fraction is then multiplied by the retired pay to determine the marital share, and the non-military spouse is then entitled one half of that amount.
Understanding the Survivor Benefit Plan (SBP) in Equitable Distribution
The Survivor Benefit Plan (SBP) is a critical element to consider in these cases. SBP is an annuity that allows retired service members to provide a portion of their retirement benefits to a surviving spouse or dependents upon their death. When dividing a military retirement, it is of the utmost importance to address SBP coverage to protect the former spouse’s potential benefits.
In North Carolina, a former spouse may be designated as an SBP beneficiary. However, this must be explicitly stated in the divorce decree, separation agreement, or court order then in the appropriate paperwork filed with DFAS. If a former spouse is named an SBP beneficiary and the service member predeceases the former spouse, the former spouse will receive a percentage of the retired pay as designated by the SBP.
Direct Pay in Equitable Distribution Cases
Direct pay from the Defense Finance and Accounting Service (DFAS) is important aspect of a military divorce. The 10/10 Rule under the Uniformed Services Former Spouses’ Protection Act (USFSPA) allows for direct payment of a portion of the military retirement pay to the non-military spouse if the couple was married for at least ten years overlapping with ten years of military service. However, it is crucial to note that this rule does not determine the amount the former spouse will receive; it only allows for the direct payment to be made from DFAS.
Disposable Retired Pay vs. Non-Disposable Pay
Understanding the difference between disposable retired pay and non-disposable pay is essential in military divorce cases. Disposable retired pay refers to a servicemember’s monthly retired pay minus qualified deductions that are not divisible like disability pay.
In North Carolina, only disposable retired pay is subject to division in divorce cases. Any non-disposable pay, such as disability benefits, is protected by federal law and not considered a divisible asset.
Understanding CRDP and CRSC
Two more elements that may come into play in the division of military retirement are Concurrent Retirement and Disability Pay (CRDP) and Combat Related Special Compensation (CRSC).
CRDP allows military retirees to receive both military retired pay and Veterans Affairs (VA) disability compensation. It applies to service members with a combined VA disability rating of 50% or more.
CRSC, on the other hand, is a compensation program for retired military personnel who have disabilities deemed to be combat-related. Importantly, CRSC is not considered a retirement benefit but a form of compensation, and therefore is not divisible during divorce proceedings in North Carolina. This distinction further underscores the complexity of dividing military retirements in equitable distribution cases.
More About What Happens To A Business During Divorce?
Identifying Business Interests as Marital Property
The first step in handling businesses in equitable distribution is to identify whether the business or business interests are marital property. If a business was started or acquired during the marriage, it is generally considered marital property, and if marital assets were invested into the business, the business or part of the business may be divisible. On the other hand, if a business was owned by one spouse before the marriage and no marital assets were invested into it, it might be considered separate of marital property. The distinction can be complex, especially with businesses that grow significantly during the marriage. At Gary Britt Law, I can assist in clearly identifying where your business interests lie and help you develop and implement an effective strategy to protect and advance your financial interests regarding the business interest during the equitable distribution process.
Business Valuation in Equitable Distribution
Once it is determined that a business is marital property, the next step is determining the business’ value. Business valuation is a specialized process that often requires the expertise of business appraisers, accountants and/or financial experts. The process involves a detailed examination of a business’s financial records, market conditions, assets, liabilities, and other factors.
There are several methods for valuing a business, including the asset approach, the income approach, and the market approach. The asset approach considers the business’s total assets minus liabilities. The income approach values the business based on its income-producing capability, while the market approach compares the business to similar businesses that have recently sold.
Choosing the most appropriate valuation method depends on the nature of the business and the circumstances existing at the time of separation. With Gary Britt Law, I work closely with valuation experts to ensure an accurate and fair assessment of the business’s worth.
Division of Business Assets
After the business is valued, the next step is to figure out how to divide its value. There are several ways this can be handled. One option is to sell the business and divide the proceeds. While this provides a clean break, it may not be financially viable or sound, and it may not be the preferred choice if one or both parties wish to keep the business running.
Another option is for one spouse to buy out the other’s interest. This can be done through a lump sum payment or through an installment plan. The buyout can also be offset against the value of other marital assets.
In some cases, both parties may wish to continue owning the business together. This is more common when spouses can maintain a good working relationship or when they believe it is in their best financial interest to keep the business intact.
It is important to note that how business assets are divided can have significant tax implications. Understanding these implications is crucial for making informed decisions for your business and equitable distribution case as a whole.
Protecting Your Business Interests
As a business owner going through a divorce, protecting your business interests is likely a top priority. There are several strategies we can employ to safeguard your business.
Handling a business in equitable distribution is a complex process that requires meticulous attention to detail and nuanced understanding of both family law and business valuation. As your dedicated family law attorney, I am committed to safeguarding your business interests, ensuring the process is carried out accurately and fairly, and helping you navigate this complex terrain with confidence and peace of mind. Reach out to Gary Britt Law today, so that you can schedule a consultation where we can discuss your unique circumstances and start your journey toward protecting your financial interests.
More About Real Property
Valuation of Real Property
The valuation of real property, which includes homes, land, and other types of real estate, is determined based on its fair market value at the date of separation. The fair market value is essentially what a willing buyer would pay to a willing seller, with neither party being under any compulsion to buy or sell.
The process of establishing the fair market value often involves using professional real estate appraisers who analyze factors such as the condition of the property, comparable property sales in the area, and local real estate market conditions.
In some cases, spouses might disagree about the property’s value. If this happens, each spouse may hire their own appraiser, and the court will consider both appraisals (and any other relevant evidence) to determine the property’s value.
Handling of Mortgages and Other Debts
Any mortgage or debt tied to the real property also plays a significant role in equitable distribution. Typically, the amount of any mortgage or home equity loan owed at the date of separation is deducted from the fair market value of the property to calculate the net marital value of the property for distribution purposes.
For example, if the marital home is valued at $300,000, and there is a mortgage balance of $200,000, the net marital value for distribution would be $100,000.
Division of Real Property and Associated Debts
Once the net marital value is determined, the court will decide how to equitably divide the property and its associated debts. Options can include one spouse buying out the other’s equity, selling the property and dividing the proceeds, or even co-owning the property post-divorce in some cases.
The division of the property’s net value and the responsibility for the mortgage or other debts are not always the same. For instance, one spouse might be awarded the property but the responsibility to pay off the mortgage might be divided between both parties. The court will make these decisions based on a variety of factors, including each spouse’s income, assets, and ability to pay.
Conclusion
At Gary Britt Law, I pride myself on providing personalized attention and support to each of my clients. I understand that every situation is unique, and I take the time to listen to your concerns and develop a legal strategy that is tailored to your needs. My goal is to provide you with the guidance, advocacy, and support you need to protect your rights and interests and achieve the best possible outcome for you.
Navigating the equitable distribution process is no small feat, but you do not have to do it alone. At Gary Britt Law, we are dedicated to helping you every step of the way, ensuring that you have the knowledge, resources, and representation you need to strive for a fair outcome. Reach out today to get started on your journey towards equitable distribution.
If you are looking for legal representation for Equitable Distribution in Fayetteville, NC and Fort Bragg / Fort Liberty, or the surrounding communities in Cumberland, Sampson, Hoke, Harnett, and Robeson counties, please do not hesitate to contact me. I offer flexible consultation and appointment scheduling that fits with your schedule, and we can discuss your case and help you understand your legal options. Let me help you navigate this complex legal matter and achieve a favorable resolution.