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What is Marital Property in North Carolina?

Before 1981, our state had traditional title ownership. This meant that the assets would be awarded to the person in whose name they were owned if a couple divorced. If the house or vehicle was in the husband’s name, for example, the wife received no share of the value for it.

Reform: Equitable Distribution

Some states have what they call community property. Instead, we use a process known as Equitable Distribution to divide marital property. After a particularly harsh result in a 1979 case that demanded reform, an equitable distribution statute was created, NC Gen. Stat. §50-20. Title ownership was fairly straight forward, but the newer process has lots or grey area. Instead of strictly using the law to simply look at the name on the deed or car title, the statute requires judges to divide property fairly (i.e., equitably) between spouses.

When the court decides property is marital, it is given to (i.e., distributed to) one spouse or the other, even if his or her name is not on the title or other ownership title. Equity gives the judge discretion to award assets as he or she sees fit, so long as it is within the terms of the law. The law requires judges to divide marital property equally unless one uses his or her discretion to do otherwise when there are special reasons.

Marital Property Definition

Marital property includes land and personal property that is acquired by either or both spouses during the marriage but before they separate. It must also be owned at the time they separate. If it meets these requirements, the property is legally presumed to be marital. In other words, if a spouse wants to show that property is his or her separate property, he or she must prove it is separate property. To beat the legal assumption that it is marital property, he or she must prove the property was acquired before they married, after they separated, or acquired by a spouse by devise (property transferred by a will) or by descent (property inherited upon death).

What Counts as Property?

The current statute includes just about everything with a dollar sign on it, and a few things that don’t have any real value, such as photo albums, or even a negative value such as an overdrawn bank account. Other examples you might not think of include cemetery property, frequent flyer miles, gambling or lottery winnings, pets. Traditional assets include retirement and investments, businesses, royalties, collections of any kind, furniture and household property, and jewelry, to name just a few. However, all professional licenses and business licenses which would terminate on transfer are automatically separate property. 

When marital asset has a lien or debt against it, like a car note or loan, that court typically ties the debt to that particular asset. If you receive the car, you usually get it along with financial responsibility for the car note and the payments. But the court has the authority to assign it to the other spouse. The law has an odd provision about gifts one spouse gives the other while they are together. They are marital unless the gift giver specifically says he or she intends the gift to separate property when the gift is given. As you might expect, that doesn’t happen much, except maybe for married lawyers!

Leatherman v. Leatherman, 297 N.C. 618 (1979).

This article is current as of 2018.©

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