Does Equitable Distribution in North Carolina Mean an Equal Split?

Equitable distribution is part of a North Carolina divorce if one or both of the spouses request it. This process allows marital property to be divided in a way that is fair and just, and there is no standard division template. Each case is unique, and property and debts will be distributed based on the evidence presented to the judge.

Smith v. Smith

In this case, Wife appealed the trial court’s ruling regarding the equitable distribution of the marital estate.

During the majority of the marriage, Wife worked as a part-time adjunct professor at a local community college. Just prior to separation, she began working part-time as a caregiver. She was unemployed at the time of the appeal hearing but receiving unemployment and Social Security benefits totaling almost $1,000 per month.

Husband started a heating and cooling business during the marriage, which he incorporated a couple of years after marrying Wife. He paid himself a salary of around $30,000 per year. His current pension benefits total $450, and he has a 401(k) plan with just over $100,000. Both Husband and Wife are limited in their income earning and employment potential due to health conditions.

Marital Property

The parties jointly own one piece of real estate, and Husband owns a second individually. The lot owned by both parties was purchased with Husband’s inherited stock. A home equity line of credit was obtained on their marital home, and Husband withdrew $49,000 from the account and deposited the money into his personal bank account.

Husband left the marital home when the parties separated. Wife lived there for approximately four months, and Husband moved back in when she left. After numerous agreements, motions, and hearings regarding the real estate valuation and division, the trial court ruled that an unequal distribution would be equitable. The court found that Huband’s separate property totaled $179,000 while Wife’s was valued at a negative balance. Despite this, their ruling awarded a larger negative amount to Wife based on the following:

• Husband paid the expenses related to the marital home even when Wife was living there post-separation
• The marital home was the largest asset of the parties
• Husband used his inheritance to purchase the marital home

Wife appealed.

When Equal is not Equitable in North Carolina Divorces

North Carolina law requires that an equal division of marital property occur unless this is not equitable, and it is at the court’s discretion to determine this. There are statutory guidelines for courts to use when ruling on equitable distribution, and they include:

• The income, property, and liabilities of each spouse
• The length of marriage
• The age and health of each party
• Pensions or retirement accounts held by either spouse

In Smith v. Smith, the trial court determined that three factors indicated an unequal distribution of property was needed.

The Court of Appeals affirmed the lower court’s ruling regarding an unequal distribution of property, stating that this decision was supported by logical reasoning.