Should You Divorce Before Settling the Division of Property?

Russell Family Law & Litigation • June 18, 2019

Property Division State of North Carolina

Settling property division matters before getting divorced is often preferable to getting the court involved.

As an equitable distribution state, North Carolina allows the court to fairly divide property during divorce.
To determine the division of property, the court needs to evaluate several factors including the health, assets, income, and liabilities of each spouse. This process takes time and may include additional legal fees, disputes, and stress.
Instead of allowing the court to divide property, spouses have the chance to come to their own agreement.

What Is a Separation Agreement?
Couples have the right to equitable distribution of marital property at the time of separation. Couples may either come to their own terms or allow the court to handle property division.
To avoid a drawn-out court process, spouses may submit a separation agreement. This agreement is a private contract between the spouses.
The terms of the agreement resolve various issues related to the separation. Besides property division, this agreement may cover child custody, child support, spousal support, and any other responsibilities.
The separation agreement needs to be in writing and signed by both parties. In most cases, spouses work with attorneys to ensure that the agreement meets legal requirements.

Spouses do not need to submit a separation agreement but settling property outside of the court provides several advantages:
● Eliminate the need for a court judgment
● Reduce the overall legal fees of divorce
● Limit the stress of the divorce process
● Work toward an amicable divorce

A separation agreement also helps prevent future disputes and resolve potential court rulings. If the spouses properly execute the agreement, it may bar subsequent equitable distribution judgments.

The separation agreement can also include details related to child custody , child support , and spousal support. However, if one of the spouses choose to file a child custody case after the divorce, the court has the right to order a different arrangement.
For example, if one parent has evidence of neglect, he or she may petition the court for custody. Based on the details of the case, the court may overrule the terms of the separation agreement.

Not all spouses can come to an amicable decision on the division of property. When spouses cannot work out their disputes on their own, the court will need to fairly divide the property.

Equitable Distribution Splits Marital and Divisible Property
When spouses cannot resolve property disputes before filing for divorce, the court begins the property division process. The goal of equitable distributionis to fairly split the spouses’ marital and divisible property.
The property includes more than just real estate. Other assets include vehicles, antiques, artwork, insurance policies, money, and even debt.
Before dividing this property, the court needs to categorize it as one of the following types of property:
● Marital property
● Divisible property
● Separate property
Marital property includes everything earned or acquired during the marriage but before separation. The divisible property covers any changes to the value of the marital property between the date of separation and the division of property.

The Court Cannot Divide Separate Property During Divorce
While the court can divide marital and divisible property, it cannot divide the separate property. This includes property that a spouse acquired after separation or before marriage.
Separate property can include property obtained during the marriage if only one spouse was the intended recipient. For example, an inheritance or a gift obtained during the marriage may count as separate property.
In most cases, the marital and divisible property includes the spouses’ home, personal property, and intangible property such as income and debts.

How Does the Court Equally Divide Property?
The North Carolina courts understand that in some situations, equal distribution of property would not be fair. Instead of simply dividing the property 50/50, the court considers the circumstances of each couple for fair property division. The following factors influence the court’s decision:
● Health
● Assets
● Income
● Liabilities
● Ages
● Child custody
● Length of marriage

The court also considers the contributions of each spouse. According to the court, spouses who act as homemakers contribute equally to the marital property.
Marital misconduct does not influence the division of property. Affairs and bad behavior may not result in the other spouse receiving a greater portion of the property and assets. However, marital misconduct does affect spousal support.

Additional circumstances may exclude certain property or affect the court’s equitable distribution judgment:
● Federal laws
● Military pay
● Death of a spouse

In certain situations, federal law may precede North Carolina law. For example, North Carolina courts cannot divide Social Security benefits or retirement pay. Military pay is also exempt from this process.
The death of one of the spouses may impact the distribution ruling, depending on when the death occurs. If a spouse dies before the court grants divorce, the court dismisses the equitable distribution process.
If a spouse dies after the court grants divorce but before ruling on the division of property, the process continues. In these cases, an executor or beneficiary handles the interests of the deceased spouse.

To file for divorce, couples need to remain separate for at least one year and one day. One or both parties must still live in North Carolina. However, both parties do not need to agree to the divorce for one party to begin the divorce process.
Before filing for divorce, take the time to consider the benefits of a separation agreement. Resolving property disputes outside of the court saves time, money, and stress. For more information, consult with a qualified North Carolina divorce lawyer.

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How are 529 Plans Handled in Divorce?

March 24, 2025

A 529 Plan, which owes its name to Section 529 of the Internal Revenue Code, is a tax-advantaged savings account that is designed to be used for the education expenses of the beneficiary. It is very common that parents create such an account to save for their child’s college education. So, what happens to such an account when the parents decide to divorce? 529 Plans , like other savings and investment accounts, are property. As such, in North Carolina, 529 Plans are dealt with during equitable distribution proceedings. During such a proceeding, the court will classify the parties’ property as one of three categories – marital, divisible, and separate – and then distribute the marital and divisible property among the parties. Thus, the treatment of the 529 Plan will depend upon how the plan is classified. N.C. Gen. Stat. 50-20 defines marital, separate, and divisible property as follows: Marital Property : “all real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of the separation of the parties, and presently owned, except property determined to be separate property or divisible property.” Separate Property : “all real and personal property acquired by a spouse before marriage or acquired by a spouse by devise, descent, or gift during the course of the marriage. However, property acquired by gift from the other spouse during the course of the marriage shall be considered separate property only if such an intention is stated in the conveyance. Property acquired in exchange for separate property shall remain separate property regardless of whether the title is in the name of the husband or wife or both and shall not be considered to be marital property unless a contrary intention is expressly stated in the conveyance. The increase in value of separate property and the income derived from separate property shall be considered separate property. All professional licenses and business licenses which would terminate on transfer shall be considered separate property.” Divisible Property : “all real and personal property as set forth below: All appreciation and diminution in value of marital property and divisible property of the parties occurring after the date of separation and prior to the date of distribution, except that appreciation or diminution in value which is the result of postseparation actions or activities of a spouse shall not be treated as divisible property. All property, property rights, or any portion thereof received after the date of separation but before the date of distribution that was acquired as a result of the efforts of either spouse during the marriage and before the date of separation, including, but not limited to, commissions, bonuses, and contractual rights. Passive income from marital property received after the date of separation, including, but not limited to, interest and dividends. Passive increases and passive decreases in marital debt and financing charges and interest related to marital debt.” Given these definitions, the classification and distribution of a 529 Plan will depend upon how and when it is created and funded. What is most important to note is that the court will not award the 529 Plan to the child, as the child is not a party to their parents’ divorce. Further, while the court may consider the purpose of the 529 Plan when making an “equitable” distribution of the parties’ property, the court will not totally disregard the value of the 529 Plan when distributing property among the parties simply because it is intended for the benefit of their child. However, the parties may take such considerations into account when negotiating a potential settlement between one another. If you are considering divorce or engaged in, or anticipate being engaged in, an equitable distribution proceeding, call our office today to schedule a consultation with an experienced family law attorney.

Do North Carolina Courts Consider Marital Misconduct?

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North Carolina is considered to be a “no-fault” divorce state, meaning that a couple need not show cause or some wrongdoing in order to obtain a divorce. However, marital misconduct does play a role with regard to the issue of alimony in North Carolina. In determining the amount, duration, and manner of payment of alimony, the Court must consider a variety of factors as laid out in N.C. Gen. Stat. § 50-16.3A(b). This statute lists 16 factors which the court will consider when determining the issue of alimony . One of the most often discussed and litigated of these factors is marital misconduct. N.C. Gen. Stat. § 50-16.1A defines marital misconduct as follows: ‘Marital misconduct’ means any of the following acts that occur during the marriage and prior to or on the date of separation: Illicit sexual behavior. For the purpose of this section, illicit sexual behavior means acts of sexual or deviate sexual intercourse, deviate sexual acts, or sexual acts defined in G.S. 14-27.20(4), voluntarily engaged in by a spouse with someone other than the other spouse; Involuntary separation of the spouses in consequence of a criminal act committed prior to the proceeding in which alimony is sought; Abandonment of the other spouse; Malicious turning out-of-doors of the other spouse; Cruel or barbarous treatment endangering the life of the other spouse; Indignities rendering the condition of the other spouse intolerable and life burdensome; Reckless spending of the income of either party, or the destruction, waste, diversion, or concealment of assets; Excessive use of alcohol or drugs so as to render the condition of the other spouse intolerable and life burdensome; Willful failure to provide necessary subsistence according to one's means and condition so as to render the condition of the other spouse intolerable and life burdensome.

Navigating Holiday Stress During Divorce: Tips for Families

December 5, 2024

The holiday season is a time traditionally associated with joy, togetherness, and celebration. However, for families going through a divorce, it can also be a time of heightened stress and emotional challenges. Managing these stressors effectively can help everyone involved – especially children – navigate this season with as much peace and stability as possible. Here are some common holiday stressors families experience during a divorce and practical strategies to address them: 1. Financial Pressures Divorce often brings financial changes that can make the holidays feel especially strained. Gift-giving, travel, and hosting events can add up quickly. Solution: Set a Budget: Be realistic about what you can afford this year. Focus on creating meaningful experiences rather than overextending financially. Free/low-cost experiences could include going to a holiday parade, going for a walk downtown or a drive around town to view the holiday lights, or taking the kids to the local mall or a store to visit Santa (or even the Grinch at some locations, such as the Cotton Exchange). Communicate with Co-Parent: Discuss gift budgets and avoid competitive or extravagant gift-giving, as this can create tension or unrealistic expectations for the children. 2. Emotional Strain on Children Holidays can amplify a child’s sense of loss or confusion about their family dynamics, especially if traditions are changing. Solution: Prioritize Consistency: Whenever possible, maintain familiar traditions to provide a sense of stability. Introduce new traditions as a way to create positive memories in this new chapter. Open Communication: Reassure your children that it’s okay to express their feelings and let them know both parents are committed to making the holidays special for them. 3. Loneliness or Isolation For people going through a divorce, the first holiday following separation can feel especially lonely and isolating. It’s normal to grieve the loss of how things used to be. Solution: Lean on Support Systems: Spend time with friends, family, or community groups that provide comfort and connection. Focus on Self-Care: Use this time to rest, reflect, and engage in activities that bring you joy and relaxation. 4. Co-Parenting Tensions The holidays can sometimes exacerbate underlying tensions between co-parents, particularly if communication is strained or agreements are unclear. Solution: Keep Communication Businesslike: Focus on logistics rather than rehashing old conflicts. Tools like co-parenting apps, such as Our Family Wizard or Talking Parents, can help keep interactions clear and professional. Put the Children First: Decisions should always prioritize what’s best for the children, even if it requires compromise. 5. Managing Extended Family Expectations Extended family members may have their own opinions or pressures about how holidays “should” look, which can complicate matters further and exacerbate holiday stress. Solution: Set Boundaries: Be clear with family members about your plans and priorities. Gently but firmly remind them that the focus is on creating a positive experience for your immediate family and avoiding negative talk about the other party or your current situation. Include Supportive Relatives: If possible, involve family members who can help diffuse stress and provide stability during this transitional time. If you are going through a divorce this holiday season and need legal representation, please contact our office to set a consultation with one of our family law attorneys.

Child Custody Picture with two parents and and child in the middle

What Should Parents Know about Child Custody in North Carolina?

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Navigating child custody arrangements can be one of the most challenging aspects of a separation or divorce. In North Carolina, the legal framework for child custody is designed to prioritize the best interests of the child, but understanding the different types of custody arrangements can be complex. This guide aims to shed light on the types of child custody in North Carolina, helping parents make informed decisions.

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By: Ashley Pollard

Co-parenting

July 19, 2024

Co-parenting is crucial to ensure that children continue to receive the love, support, and guidance they need from both parents despite the parents’ separation or divorce. By working together, parents can create a stable and nurturing environment that fosters the emotional and psychological well-being of their children. Effective co-parenting helps children adjust to change, reduces feelings of insecurity, and promotes healthy development. It also models positive conflict resolution and cooperation, providing a strong foundation for children’s future relationships. Ultimately, co-parenting prioritizes the best interests of the children, helping them thrive despite the family restructuring. Successful co-parenting after separation or divorce requires open communication, mutual respect, and a focus on the well-being of the parties’ children. To best ensure the success of a co-parenting relationship, it is crucial to keep discussions child-focused, and avoid negative talk about the other parent in front of the children. Flexibility and willingness to compromise are key, as well as seeking professional help if conflicts arise that cannot be resolved independently. Prioritizing the children’s emotional and physical needs will help ensure a positive co-parenting experience. Here is a list of ideas for potential resources that may help co-parents manage and support their children’s well-being while navigating the changing family structure: Books for Children Age-appropriate books explaining separation and divorce Stories that help children understand and cope with their feelings Therapists and Counselors Child psychologists for children’s emotional and mental health Family therapists specializing in co-parenting dynamics Support Groups for Children Peer support groups for children of divorced parents In-person and online groups providing a safe space for children to share their experiences School counselors and social workers providing support and guidance Mobile Apps Apps designed to help children understand and manage their emotions Co-parenting apps with features to ensure both parents stay informed about their child’s activities and needs Books and Guides for Parents Manuals on how to support children through the transition Guides focusing on effective communication with children post-separation Guides focusing on effective communication with your child’s other parent Podcasts and Videos Podcasts offering advice on supporting children’s mental health during divorce YouTube channels with content aimed at helping children cope with family changes