Equitable What??? - Property and Debt Division in

North Carolina

1. Important Terms to Know:

“Date of Marriage” - The day you get married is the start date for establishment of your “marital estate.” 

“Date of Separation” - The day your “marital estate” closes. This date is crucial when figuring out the financial status of a marital estate for distribution purposes. 

“Date of Distribution” - The day property is distributed to either party either by a Court Order or Agreement. This date is important when determining the value of “divisible property.”

“Marital Property” - Generally, anything acquired by one or both of the spouses between the date of marriage and the date of separation for the joint benefit of the parties and marriage. This likely includes personal property (ex. Furniture, jewelry, vehicles), real property (i.e. real estate), pension/retirement accounts, and debts. 

“Separate Property” - Generally, separate property is property that was owned by one spouse prior to the date of marriage or property acquired by one spouse through “devise, descent, or gift” during the marriage. There are additional things that need to be shown to the Court if the gift was from one spouse to the other spouse during the marriage to create “separate” ownership. 

“Divisible Property” - Divisible property is the change in value of marital property (either increase or decrease) between the date of separation and the date of distribution. A simple application of this concept is as follows: Fair Market Value of the Former Marital Residence at the Date of Separation = $150,000. This amount increases such that the Fair Market Value at the date of distribution = $250,000. The divisible property amount = $100,000.

“Marital Estate” - includes property (personal and real) and debts.

“Marital” and “Divisible” property are generally subject to Equitable Distribution under North Carolina law.

2. North Carolina is an "Equitable Distribution" State

North Carolina presumes that an equal, 50/50, split of the marital estate is “fair.” If a different outcome is desired by either party, that party must bring the Court evidence as to why the marital estate should be distributed another way or otherwise in a disproportionate fashion. 

3. Property must be categorized as "Marital," "Separate," or "Divisible"

The initial stage in the Equitable Distribution process is to categorize each asset and debt from a marriage as “marital,” “separate,” or “divisible.” This includes items that either party owns but may be utilized by a third party, such as a vehicle owned by a parent for a child.

4. Debts in the name of one spouse may be categorized as "Marital Debts"

“That credit card was in his/her name only, so that debt is not marital right?” This is a question that is asked often to a family law attorney. 

In North Carolina, any debts acquired “during the course of the marriage” are included as part of the “marital estate” regardless of the named spouse on the debt and therefore must be considered "marital" and distributed so long as: 

(1) It was acquired between the date of marriage and date of separation,

(2) the debt existed as of the date of separation, and

(3) the debt was for the joint benefit of the marriage.

5. Overcoming the Presumption of "Marital" or "Separate" requires Evidence

North Carolina presumes that assets acquired during the marriage are “Marital” and  assets acquired before the marriage or after the date of separation are “Separate”. If you have an item that you feel should not be categorized using the “default rule,” it is the moving party’s burden to show evidence to the Court as to why it should be categorized differently.

If you are going through an amicable or contentious property and debt distribution as a result of separation or divorce, our Modern Legal team is here to help. 

Please note: these educational materials are based on North Carolina law where my legal practice is based. While the insights may have wide applicability, readers should consult with an attorney regarding the specific laws in their state or country. 



Written by: Tiffany A. Byrd