In-Kind Distributions and Distributive Awards in North Carolina Equitable Distribution

As part of the North Carolina divorce process, spouses often have assets that need to be divided between them. Equitable distribution is an option if one or both spouses request it, and it is the process by which the court will divide the property in a way that is equitable but not always equal.

North Carolina law includes the ability to use in-kind distribution when equitably dividing property. In-kind distribution of assets means that something other than money is being distributed, such as real estate. For example, rather than one spouse receiving $300,000 in cash, they receive the marital home valued at that amount.

In-Kind Distributions and Distributive Awards in North Carolina

If there is not sufficient marital or divisible property to divide equitably between the spouses, courts may order the spouse receiving the higher value of assets to pay a distributive award. Distributive awards, according to state law, do not include support or maintenance payments; they are separate from any spousal support that is ordered. The payments may be made as a lump sum or in fixed amounts over a specified period of time.

Milford v. Milford

In a recent North Carolina Court of Appeals case, Milford v. Milford, Husband appealed a court order that directed him to pay Wife a distributive award. Husband alleged, among other things, that the trial court was in error when it found that the presumption of an in-kind distribution had been rebutted.

State law permits a distributive award to effectuate, facilitate, or supplement an in-kind distribution, but courts that make such a judgment must support their findings with evidence. Husband in Milford alleged that the trial court abused its discretion because it did not make the necessary findings to rebut the presumption of an in-kind distribution.

The trial court listed, among numerous other findings of fact, that the largest assets in the marital estate were the former marital residence and the parties’ businesses. Because Husband received these assets, and there were not sufficient assets remaining in the marital estate for Wife to receive an in-kind distribution, Husband was ordered to pay Wife a distributive award.

The Court of Appeals found the evidence used by the trial court sufficient to support the decision. Specifically, the appellate court stated that it was clear that the lower court found it impractical to order an in-kind distribution, thus leading to the necessity of a distributive award. The Court of Appeals consequently affirmed the trial court’s ruling.