How is separate property handled in a North Carolina divorce?

It can be more complicated than you might expect.

In a North Carolina divorce, of course one of the most important issues is how property (and debts) will be divided between the divorcing spouses. Decisions - whether pursuant to a negotiated settlement agreement or made by a judge - about property and debt division will affect the standard of living of each ex-spouse going forward, sometimes for years.

North Carolina statute provides, broadly, that the court must determine which property is "marital and divisible" and then divide it equally, or if equal is not fair, equitably, between the divorcing parties. Marital property consists of "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 ... and presently owned ..." Divisible property is a narrow category consisting mainly of increases in value of or income generated by marital property between the separation date and the divorce date.

The statute says that separate property is not divisible and belongs to the spouse that owns it. Separate property is real estate or personal property that a spouse owned before the marriage or that they got from a gift or inheritance. Income generated from separate property generally remains separate. Basically, the judge determines the marital and divisible property (and debt) and divides it equally or equitably, and each spouse's separate, nonmarital property (and debt) remains their own after divorce.

Although it seems straightforward, sometimes there is disagreement over what is separate property, especially in high asset divorces. There can be complex legal issues to resolve when, for example:

  • Whether a spouse's gift to the other spouse during marriage was intended to become separate property
  • Whether when a spouse exchanged separate party for other property there was an adequate expression in the transaction that the spouse meant to reclassify the exchanged property as marital property
  • Whether a spouse contributed to an increase in value of the other spouse's separate property during the marriage
  • Whether sufficient evidence supports division of separate and marital funds comingled in the same account
  • And others

When a dispute over whether an asset is marital or separate arises, the court in North Carolina usually looks more at the nature of the property and its history of ownership, rather than at whether the title is in only one spouse or in both of their names.

The attorneys at The Pendleton Law Firm in Lincolnton, North Carolina, represent clients in divorce and other family law matters in the Lincolnton area and across Western North Carolina.