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.
Lindsey Dasher is the Managing Partner at Dasher Law PLLC