Arbitration is an alternative dispute resolution method that allows for parties to have their family law issues resolved without going to court.
North Carolina’s Family Law Arbitration Act (N.C.G.S. 50-41) allows couples to choose to arbitrate any or all issues arising from a separation or divorce, except for divorce itself. This can include any or all of the following issues: Equitable Distribution, Alimony, Child Support, or Child Custody. Arbitration is not a mandatory requirement and is something that the parties must mutually agree to before submitting an issue to an arbitrator. The parties agree to submit an issue or issues to a neutral third-party arbitrator, who acts almost like a private judge by hearing evidence and providing a binding or non-binding decision. The parties typically share the cost of the arbitrator unless their agreement allows the arbitrator to allocate the costs differently.
South Carolina has not adopted a family-law specific arbitration act like North Carolina, but parties may mutually agree to utilize arbitration as an alternative dispute resolution for property and alimony issues under the Uniform Arbitration Act, which South Carolina has adopted. South Carolina case law has held that it is not permissible to submit child custody and child support issues to binding arbitration with no right to judicial review. Child custody and child support issues may (or, when there is a lawsuit pending, must) be submitted to mediation as an alternative dispute resolution prior to trial. In South Carolina, arbitrators can be certified by South Carolina’s Board of Arbitrator and Mediator Certification, but parties can choose an arbitrator who is not certified by the Board. All arbitrators must follow the Alternative Dispute Resolutions Court Rules and the Code of Ethics for Arbitrators that South Carolina has adopted.
In arbitration, parties have a private trial in front of an arbitrator who issues a binding or non-binding decision that the parties must then follow. Similar to a trial in front of a judge, the parties present documentary evidence and testimony, and then the arbitrator (instead of a judge) issues a decision. An arbitrator can issue subpoenas for witnesses to appear and for production of documents or records needed. The arbitrator administers oaths for witnesses to testify and can take depositions, if needed. You can and should be represented by the attorney of your choosing during arbitration.
Benefits of Arbitration
Disadvantages of Arbitration
If you are interested in arbitration or other alternative dispute resolution mechanisms, please reach out to our office. As a firm, we focus on out-of-court resolutions for our clients and arbitration is a great option for many clients. Lindsey is available and qualified to mediate or arbitrate your case in North Carolina or South Carolina.
Dividing Marital Assets (Equitable Distribution or Apportionment)
Today's post is part two in a three-part series addressing what a stay-at-home parent can expect legally and financially upon separation and divorce. Head back to review our first post before you continue on! Just because the supporting spouse “earned” the income or acquired the marital assets with his or her income does not mean that a stay-at-home parent forfeited any right to half of the value of the acquired assets. Stay-at-home parents are entitled to an equitable distribution of the net marital estate upon divorce. Equitable distribution (or equitable apportionment in South Carolina) means that all marital debts and marital assets will be equally divided (50%/50%) between the spouses.
To learn more about equitable distribution in North Carolina and equitable apportionment in South Carolina, click this link to take you directly to our firm’s blog post devoted to explaining the basics.
Stay-at-home parents do not lose their rights to half of their spouse’s retirement account(s), bank accounts, the marital home, or marital cars when they choose to stay home and support their supporting spouse by caring for the children, house, and other household management tasks. As long as the assets were acquired during the marriage, the assets are considered “marital” and the stay-at-home parent would generally be entitled to 50% of the value of the asset. The same rule applies for any debts or liabilities incurred during the marriage, generally speaking.
Please reach out to our firm to schedule a consultation if you are a stay-at-home parent and need guidance on dividing your marital estate. We are very familiar with supporting stay-at-home parents through this transition and can help you, too.
Equitable Distribution or Apportionment Basics
During a marriage, you acquire property — whether just through the paychecks you receive from your employer or larger acquisitions like purchasing a house or car, starting a business, buying stocks, or investing money into retirement accounts. Additionally, you might acquire debts during your marriage. Both North and South Carolina laws provide for the division and distribution of the marital estate between spouses, including both property and debts. This is called “equitable distribution” in North Carolina and “equitable apportionment” in South Carolina. There is a general presumption in both states that it is fair and equitable to divide all the property and debt acquired during the marriage (the “marital property”) equally (50%/50%) between the spouses.
What is Marital Property?
All assets, debts, personal property, and real property obtained during the marriage are considered marital property and will typically be divided equally between the spouses. Marital property can include pensions, retirement accounts, deferred compensation plans, personal property, and real property, among other assets. In North Carolina, property acquired from the date of marriage until the date of separation is marital property. In South Carolina, property acquired from the date of marriage until the date of filing of marital litigation is marital property.
What is Separate Property?
Any assets, debts, and property obtained prior to marriage or acquired by a spouse by bequest (gift through a will), devise (inherited through a will), descent (if someone dies without a will and you inherit property from them), or gift during the course of the marriage. Separate, or non-marital, property is not subject to equitable distribution or apportionment. Separate property will remain the property of the spouse who brought that property or debt into the marriage or who acquired it during the marriage through one of the methods mentioned hereinabove.
What is Divisible Property?
Divisible property is any increase or decrease in the value of the marital property that occurs between the date of separation and the date of division of the property. For example, any rise or fall in the value of the former marital residence due to external factors like the real estate market that occurs between the date of separation and the date of division of the property is divisible and will be divided between the parties.
Who is responsible for debts accrued during the marriage?
All debts and liabilities accrued during the course of the marriage, including mortgages, credit cards, student loans, marital business debts, and medical debts are considered a part of the marital estate. The debts and liabilities will be split equally (50%/50%) between the spouses in equitable distribution or equitable apportionment, just like the assets. In North Carolina, marital debts are debts acquired from the date of marriage until the date of separation. In South Carolina, marital debts are debts acquired from the date of marriage and before the filing of marital litigation.
How do you determine the appropriate division of assets and debts?
How to classify and divide marital assets and debts is something that is usually agreed to by the spouses in a Separation Agreement. Look at equitable distribution or apportionment as a complex and creative math problem to provide 50% of the marital estate to each spouse without making additional work or costing additional money for the spouses or attorneys. For example, the division of a retirement account sometimes requires a special court order called a Qualified Domestic Relations Order to divide the account. Drafting and submitting a Qualified Domestic Relations Order costs additional money and time, so if there is a way to make both spouses whole (each receiving half of the net marital estate) without dividing up the retirement account, that is preferred.
Lindsey Dasher is licensed in both South Carolina and North Carolina to help you understand your property rights in relation to equitable distribution or apportionment. Contact our office if you have further questions about your property rights upon separation.
Do we have to sell the house?
It depends. There is a presumption in both North Carolina and South Carolina that all of the marital assets and debts will be split equitably between spouses, which includes both the equity in the house and the mortgage debt. If one spouse wishes to keep the house, that spouse must figure out how to do two things: First, the spouse keeping the house must remove the other spouse’s name from the mortgage loan (typically either by refinance, payoff, or assumption), and second, the spouse keeping the house must find a way to pay the other spouse their portion of the equity in the home, if any. For example, the spouse keeping the house might provide the other spouse with a greater portion of marital savings accounts or brokerage accounts in an equivalent value to the other spouse’s portion of the equity in the home. Oftentimes, however, the largest asset couples have is their home and there is no other way to provide each spouse with 50% of the equity in the home except to sell the home and divide the equity proceeds resulting from the sale.
Do I have to share my retirement/401(k) savings?
It depends. If you have retirement savings that you accumulated prior to marriage, those funds would typically be considered “separate property” and not subject to division in divorce. Retirement savings and 401(k) account funds that have accumulated during the course of the marriage are considered “marital property,” and are subject to equitable apportionment between the spouses. If you both have close to an equal amount of retirement savings in each of your individual retirement accounts, you might both keep your individual accounts without splitting them. If one spouse has saved most of the retirement for the couple in his or her individual 401(k) account, then the other spouse is typically entitled to half of the funds. That being said, dividing the marital estate is a creative math problem. If you keep your full 401(k) account in the divorce, is there another way to allocate to your spouse the equivalent of 50% of your 401(k) savings? Could you provide your spouse with a greater portion of the equity in the home? Are there other liquid accounts your spouse could be allocated? This is a situation where you definitely need to consult with a lawyer to figure out the best way to divide your marital retirement accounts fairly without incurring extra fees and expenses.
Can I get (or will I have to pay) alimony in North Carolina?
Alimony is not automatically awarded in North Carolina. North Carolina has a need-based approach to alimony; one spouse must need alimony to maintain the standard of living they became accustomed to during the course of the marriage and the other spouse must have the ability to pay alimony. The “supporting spouse” would pay alimony to the “dependent spouse” to cover the dependent spouse’s needs that they cannot afford on their own.
In North Carolina, if adultery was committed by the dependent spouse (even if the dependent spouse needs alimony), however, this behavior bars the dependent spouse from receiving alimony. If the supporting spouse has committed adultery (and the supporting spouse has the ability to pay), then the dependent spouse will be awarded alimony.
Lindsey Dasher is the Managing Partner at Dasher Law PLLC