What types of property can be subject to equitable distribution?

How to divide marital assets and property is one of the most hotly-contested aspects in divorce proceedings, and the principal of equitable distribution governs the process of this division. While dividing up assets like a house, car, or other tangible property may seem simple enough, there are other assets like a retirement account or trust fund that may be subject to equitable distribution as well.

Klein v. Klein

So what assets are subject to equitable distribution in divorce proceedings? The Klein case involved a husband challenging the trial court’s rulings as to whether certain debts, accounts, and payments would be classified as marital property.

Background

In this case, the wife sought a divorce along with child custody, support, alimony, and equitable property distribution. Prior to the divorce, the wife left for Virginia with the couple’s son to support her aunt following a family loss. While there, the wife received notice from her husband’s attorney that he was accusing her of “absconding” with their young son and threatened to seek emergency custody.

After initial disputes, a consent order awarded her primary custody, child support, and postseparation support. Subsequent court orders granted her additional alimony and property distributions, though the husband contested these rulings, appealing parts of the judgment regarding child custody, alimony, and retirement distributions.

Appeal by Defendant Husband

On appeal, the husband raised several issues with the equitable distributions awarded by the trial court. The trial court classified a $110,000 payment from wife’s relatives for a marital home as a marital debt, not a gift, due to the husband’s inconsistent testimony and documentary evidence suggesting an intent to repay. Although husband argued there was no written agreement, the court sided with the trail court’s classification.

Second, the trial court classified $15,000 that the husband paid to a colleague as a loan rather than a gift, based on wife’s testimony. While the husband argued the payment was a gift, the court found his testimony to be inconsistent. It therefore relied on the wife’s belief that it was a loan and determined that repayment was expected. The appellate court agreed with this determination.

Third, the wife’s Charles Schwab IRA, was ruled to have both marital and separate property, as she had accrued value to it before her marriage and after the separation. The husband contested the court’s ruling the allocation of percentages, but the appellate court found that he had had waived objections by not challenging all relevant evidence during trial.

Business assets

Fourth, the husband received $587,063.63 from a settlement over his medical practice. The court found that the lawsuit’s primary aim was economic, to protect the physicians’ ability to work, making the proceeds marital property. Despite the husband’s argument that it was for personal damages, the appellate court agreed with the initial determination that he did not prove it was solely personal.

Finally, the husband also argued against equitable distribution surrounding a joint tax debt and federal retirement benefits. The husband argued for credit on tax payments made post-separation, but, since he made the payment from marital funds, the court denied his claim. The husband also challenged the trial court’s jurisdiction over orders affecting his federal retirement, but he was unable to provide any reasoning or law to support his appeal.

For a divorce that involves complex financial issues, seek the help of a North Carolina family law attorney experienced in such matters. It will make a difference.