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Why You Shouldn't Divorce Before Property is Settled
How Does North Carolina's Property Distribution Work?
In Wilmington, North Carolina, you can resolve the distribution of property through a property settlement. A property settlement is a type of agreement between spouses engaged in a separation process.
However, if an agreement is not possible, spouses must resort to court-sanctioned property distribution. In such a case, the ex-spouses have to undertake a series of steps the court sets, in the process known as "equitable distribution" (E.D.).
If you want to learn more details, consult the property distribution statutes. Also, if you think you might have to go to court in the foreseeable future, please read our Tips on Meeting with a Divorce Lawyer for the Frist Time. Another good source of information is our blog post that we provide each month. There, we talk about common problems that arise in property distribution, child custody, and so much more.
Use a Separation Agreement to Settle Property Without Going to Court
When the separation process starts, the spouses' rights to the E.D. of property become effective. However, those rights are not inherent. That means at least one spouse must explicitly assert them. When the court receives the application from a spouse, it assesses the marital property and arranges for equitable distribution.
At any point after the divorce, either spouse can start the E.D. process as an individual action. But they can also file it in conjunction with some other action brought under Chapter 50 or as a motion in the case. A judge has the authority to issue a final E.D. ruling before the divorce is complete or after it. If the ruling is issued by consent, both spouses might agree to it before the divorce.
Avoid "Disappearing Property"
You can obtain injunctive relief and temporary orders due to special legislative conditions that permit injunctive relief to stop the disappearance, conversion, or waste of property believed to be marital or separate. They also allow directions to distribute a portion of marital assets.
Partial distribution can include a distributive award. But injunctive relief is offered prior to or after an E.D. action begins to avoid disappearance, conversion, or waste. A court cannot issue an order partly dividing the property before a spouse files an E.D. action.
The Purpose of the Separation Agreement
If you don’t have a prior claim protecting you, an absolute divorce can impose a bar preventing you from starting the E.D. process. Another typical obstacle to E.D. is the preceding enactment of a legitimate, complete property settlement splitting the spouses' property or surrendering the privilege to E.D. in any other way. That means that if the agreement is properly signed in compliance with the standard legislative requirements, it may exclude a future E.D. under the conditions mentioned below.
A prohibition like that may result not just from property settlements reached during the separation process but from written prenuptial and postnuptial contracts as well.
The unperformed or executory provisions of a separation agreement that included property stipulations were generally held to be invalid under prior law reconciliation. The courts today distinguish between contracts where the spouses desire a full property settlement, no matter if they ever get back together after a divorce, and agreements where the separation is of the essence.
Property settlements must be interpreted in accordance with the spouses' intentions and the contract's language. Only if the release of property rights in such an agreement "necessarily" hinged on the spouses staying apart would a reconciliation nullify the release.
To What Extent Does Death Affect Equitable Distribution?
Whether both spouses are still alive might also have an impact on an E.D. claim. The timing of a spouse's passing can significantly affect whether a pending E.D. case will succeed. Court will bar the E.D. if a spouse passes away while the E.D. claim is underway but before a court grants an absolute divorce.
On the other hand, if an E.D. claim is ongoing and the divorce was already granted, the spouse's passing after would not impede E.D. In this situation, the administrator of the decedent's property or executor must join the ongoing action together with any inheritors whose claims the E.D. action will affect. Any order of selling real property is invalid as to the heirs if they are not united.
Protecting Military Pay from Property Division
The North Carolina Court of Appeals has finally confirmed that military disability payments do not fall within the federal definition of "disposable retired or retainer pay." Therefore, they cannot be designated as matrimonial property or allocated under North Carolina equitable distribution legislation.
Previously, the Court of Appeals had ruled that disposable serviceman's retirement payment, as federal law defines it, can be distributed under the explicit language of the Uniformed Services Former Spouses' Protection Act and G.S. 50-20(b)(1). G.S. limits allocation to "eligible" military pensions and thus doesn't cause preemption issues. Such a ruling was following the decision of the United States Supreme Court.
The Court's Method of Property Division
The court uses a three-part analysis when allocating marital property. Only the debts and assets belonging to the parties as their marital property will be divided. An order dividing the spouses' property must include documented findings of fact that support the court's conclusion that the property was split equitably.
