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What in the World is Divisible Property?

 

Marital property is property that a married couple owns when they separate, as long as they acquired it during the marriage. Separate property includes property that you owned before marriage, property that was a gift to you individually, or inherited property. In 1997, North Carolina created something else, divisible property. [1] This article barely scratches the surface of it, and does not include divisible debt.

What’s Included in “Divisible Property”?

Only property owned on the date of the separation is marital property. But what happens to marital property after you separate? The time from the date of separation until the date that the case finally reaches the courtroom can easily be a year or longer. If the value of a marital asset changes, the court will decide what to do with that change in value. If the court says the change in value of marital assets is divisible property, the amount of that change will be divided 50/50. Otherwise, the change in value will not be divided and that change in value is kept as separate property.

For Example . . .

Assume your home is worth $200,000.00 when you separate, and that you still live there. By the time you reach the courtroom, after 13 months have passed, the value increases to $225,000.00. The judge will decide whether that $25,000.00 difference in value is divisible property. If so, it will be equally divided and each spouse would get value worth $12,500.00. On the other hand, if the difference is not divisible property, that increase in value is the separate property is yours.

What Makes the Change in Value Divisible?

The increases and decreases in the value of marital property after separation are assumed to be divisible property, and divided equally. This assumption is based on things such as inflation, changing economic conditions and market forces, the mere passage of time and changes in tax assessments. These increases in value are divisible property because they are natural changes, which the court calls these changes “passive” in nature, generally beyond either spouse’s control.

What Makes the Change in Value Separate or Shared Property?

Although the law assumes that the change in value is divisible property and equally divided because the change in value was passive, you can offer evidence to show why the change in value is not passive. In other words, if you want to show that the increase in value is your separate property, you have the burden of proof to show why. To meet that burden, you must prove the changes in value are directly caused by your action after separation. What counts as activity? For example, after the separation, you decide that the house would sell for a much higher price if you renovate the kitchen and add an extra bathroom. If you can prove that your individual actions actually caused the increase in value, the increase would not be divisible property. Therefore, the $25,000.00 increase in value from our example above would be awarded to you as your separate property.

 

 

 

 

 

 

 

Amy Edwards & Associates, PLLC. Our attorneys are licensed only in NC. Laws change. This article is current as of 2018. www.NCLawyersForYou.com©

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