Who Divides Marital Property in a Divorce Case & How?

Written by Jonathan Breeden

May 25, 2022

Spouses who can agree on dividing marital property may need a judge simply to finalize the arrangement. However, reaching this compromise on their own does not typically happen in a high-asset divorce.

Read on to learn what constitutes marital property and how it’s divided in a divorce.

What Is Considered Marital Property?

In general, marital property is assets or debts acquired during the marriage. Separate properties are assets or debts either spouse had before getting married. Separate property is also an inheritance or gift that either spouse receives from a third party during the marriage.

The court divides marital property during a divorce, but not separate property.

Net Value of Marital Property

The court uses bank statements, stock certificates, appraisals, and other tools to identify the net value of the marital property. The net value is what the estate is worth after all debts are paid.

Exceptions to Separate Property Rule

In some situations, a spouse could seek to divide separate property if it increased in value because of their financial or non-financial contribution. For example, a spouse could own a business before marriage, but if both parties invested time or money, portions of its net worth could be divided.

Examples of Marital Property

Marital property includes a wide variety of investments, assets, and debts acquired by either or both spouses while married, including:

  • Real Estate: Family home, vacation home, time-share, rental property, commercial property, or land
  • Other Tangible Property: Cars, boats, RVs, off-road vehicles, boats, jet skis, or airplane
  • Valuable Items: Artwork, jewelry, antiques, collectibles, and firearms
  • Financial Assets: Checking & savings accounts, money market funds, cash, cryptocurrency, annuities, life insurance policies, 401(k)s, retirement accounts, pensions, and stock options
  • Debts: Mortgage, auto loans, credit card debt, and home equity loans

Dividing a Business

When spouses are also business partners, it can be challenging to divide business assets fairly. A divorced couple can remain business partners, but it is highly unlikely. One of the priorities in a divorce that involves family-owned businesses or partnerships is to complete a comprehensive business valuation.

The most common solution for dividing a family business is selling the assets. Each spouse receives half the profits after all debts are paid. Another option is for one spouse to buy the other’s share.

How Judges Divide Marital Property in North Carolina

North Carolina uses equitable distribution to divide marital property in a divorce. Equitable does not mean fair or a 50/50 split in every situation. A judge may award more property to one party and more debt to the other party to reach a “just and right” decision. Judges view marriage as a partnership to which both parties contribute financially and in other valuable ways.

When allocating marital assets, judges consider several things.

Income Disparity Is a Factor

Typically, one spouse earns more than the other. In many relationships, one spouse sacrifices a career and income potential to support the other, the children, and stable home life. A judge may award additional property or assets to account for the disparity in income and resources.

Duration of Marriage

The duration of the marriage is also a factor when a judge divides the marital property. The longer the length of the marriage, the more time the couple had to acquire marital property. If the marriage was relatively short, it’s likely not as much marital property was acquired, which will affect the division.

Each Spouse’s Health & Age

A judge considers the health and age of each spouse when dividing marital property. For example, a spouse with a chronic health condition has different financial needs than a healthy spouse.

Income & Earning Potential

A judge divides marital assets and debts with consideration of each spouse’s income and earning potential. The court could award separate spousal support for a spouse who needs education or training to become financially self-sufficient. This spousal support could offset property or another investment.

Tax Consequences

A judge tries to divide tax burdens equitably. Again, this consideration depends on each party’s income and financial resources.

Financial Misconduct

Gambling, spending money on an extramarital affair, and other forms of financial misconduct by the parties involved may influence a judge’s decision.

Non-Financial Contributions of Stay-at-Home Parents

Spouses who stayed at home to maintain the household and care for the children don’t have a substantial income. However, their non-financial contribution allowed the earning spouse to advance their career. A judge considers the value of a stay-at-home spouse when determining how to divide marital assets.

A Division of Property Lawyer Protects Your Assets

One of the best ways to protect your assets and receive your fair share is by working with an experienced divorce attorney. The Breeden Law Office has helped clients throughout North Carolina resolve their differences for a favorable division of property.

For an initial consultation, contact the Breeden Law Office online or call (919) 661-4970.


Divorce In North Carolina: What You Need To Know

A book by Jonathan Breeden