Distributive Awards and Liquid Assets in North Carolina Divorces

In divorce cases involving equitable distribution in North Carolina, courts will sometimes order that one spouse pay a distributive award to the other. These awards are intended to balance out or make equitable the division of property distributed to each spouse. However, a spouse’s ability to pay a distributive award must be considered according to the liquid assets they have on hand. If insufficient liquid assets exist to pay the award, the equitable distribution of property should be reevaluated.

Mendez v. Mendez

Husband in the case of Mendez v. Mendez appealed an equitable distribution ruling due to the trial court’s decision to award Wife a $5,000 distributive award. He also appealed the court’s decisions regarding child support and custody, arguing abuse of discretion in all issues.

Husband filed for divorce from bed and board, including a request for equitable distribution and child custody and support determinations. Wife filed a subsequent complaint for a domestic violence protective order. The trial court determined that Wife and their children had suffered domestic violence perpetrated by Husband, and later proceedings granted custody of their sons to Husband and custody of their daughters to Wife.

Wife then filed a motion for ex parte emergency custody, alleging that Husband had physically and sexually abused the children. She was granted temporary exclusive custody of all five of the parties’ children, and they later entered into an agreement that Husband would have visitation with their sons but not their daughters.

The trial court awarded Wife child support in the amount of $1,185 per month and a distributive award of $5,000. Husband appealed the child custody, support, and equitable distribution decisions.

The Appeal

The Court of Appeals overruled his arguments regarding custody and support but found merit in his equitable distribution argument. The appellate court agreed with his assertion that the trial court did not provide sufficient identification, valuation, or distribution of the parties’ property. In addition, the lower court did not provide findings of fact about Husband’s ability to pay a distributive award with liquid assets.

Courts are required to make findings as to whether a party has liquid assets sufficient to pay distributive awards. If a loan or non-liquid asset must be used, the equitable distribution award must be recalculated to include any negative financial consequences caused as a result. The trial court in Mendez v. Mendez referred to certain household goods in their findings of fact when determining the value of the marital estate, but the Court of Appeals agreed with Husband’s argument that this description was too vague.

There was also no inclusion of liquid assets or funds in the trial court’s findings to suggest Husband could satisfy a $5,000 distributive award payment. The Court of Appeals vacated the lower court’s award for equitable distribution and remanded the case for further proceedings regarding this issue.