Frequently Asked Questions About Property Issues

What Is Martial Property?
Marital property is property acquired by either or both of the parties during marriage, other than gifts from third parties or an inheritance, which is owned by the parties on the date of separation. It includes both assets and debts. So long as the asset or debt was acquired during marriage and exists on the date of separation, it is subject to distribution by the court. Except in certain situations, the property will be considered marital under the above definition regardless of whether the property or debt is in the name of just one party or both parties.

What if I Started to Buy Something Before Marriage But Finished it After Marriage?
Property can have a dual nature, and can be classified as part separate and part marital. Where property is dual in nature, the trial court applies a “source of funds” approach to distinguish between marital and separate contributions to the property. Under this approach, when both the marital and separate estates contribute assets towards the acquisition of property, each estate is entitled to an interest in the property in the ratio its contribution bears to the total investment in the property.

I Owned My Business Before Marriage, It’s Mine, Right?
Yes and no. A corporation or a partnership is sometimes treated differently than a sole proprietorship. In general, a small business, especially one which is a family run business, will have a dual nature. It will be necessary to value the business as of the date the marriage started and then again on the date of separation. Any increase in the business that is attributable to work done after marriage will be considered marital. These issues can be very complicated and you should definitely discuss the situation with your attorney.

My Spouse Has Commissions Due on Work Done During Marriage But They Have Not Yet Been Paid, and Also Has a Pension and a 401-k, Do I Get Any of It?
Yes, income received for work done during marriage is marital property and subject to distribution. The same is true of stock options and retirement plans. Even if a retirement plan is not yet vested, it can be divided by the court but if the earning spouse doesn’t get it (say for example the customer cancels the order so no commission is ever paid or your spouse leaves the job prior to the funds ever vesting), neither will you. There is, also, another form of property including income and debt incurred on marital property after the date of separation but not through the work of either party. These funds are known as divisible property and subject to distribution by the court.

I Took Some of My Inheritance and Put Money Into Buying the Family Home, I Still Get My Money Back, Right?
Sorry, no. There is an exception to the rule that separate properly remains separate if there is evidence that a party made a gift of the funds to the marriage. Buying property with the down payment from the inheritance and taking title of the house as husband and wife, sometimes called tenancy by the entireties, is considered a gift of the funds to the marital estate. There are ways to prevent this result if you see an attorney before you make the investment.

I Owned an Apartment Building Before We Got Married and Never Changed the Title, but I Continued to Pay for it after Marriage, It’s Still Mine, Right?
Yes, it is yours, but the marriage has a marital component in the value of the house based on several different factors including the amount that the property was paid down by the use of marital funds or the amount of marital funds used for upkeep, maintenance, taxes, or insurance.

How Does The Court Decide How to Divide the Marital Property?
An easy answer is that the court is required to classify, value, and divide the property of the marriage. It first has to decide if the property is separate, marital, of dual nature, or divisible property. It then has to value the property and finally the property is divided.

I Heard That Property Division Is Called Equitable Distribution in North Carolina, What Does Equitable Distribution Mean?
Under North Carolina law, the court is required to distribute the marital property equitably between the parties. Equitable means fair and in an even handed manner. The court has concluded that in the absence of evidence to the contrary, equitable means equal. There is a lengthy list of things for the court to consider which could lead the court to order an unequal distribution.

Do I Have to Go to Court to Have the Property Divided?
No, you can settle all matters including distribution of property by separation agreement. You can, also, just divide the property between yourselves and not bring an action for equitable distribution at all. However, beware: if you do not enter a claim for equitable distribution or enter into a written and notarized agreement dividing the marital estate before a judgment for absolute divorce is entered, you will lose the right to bring any such action. After divorce, you will own all property in your name or possession, including both assets and debts, and your spouse will own all property in the spouse’s name or possession. Any property in which you both are on the title will be considered to be owned jointly as tenants in common.

What If My Spouse is Still on My Credit Card?
If your spouse is an authorized user on your credit card, you may ask that the spouse be removed and that no new charges should be made by him or her. If you are both co-owners of the account, regardless of whose name appears first, you are both jointly and severally liable for the balance. If you want to close the card but the bank won’t let you unless you agree to take full responsibility to pay the balance, you can provide the bank with notice that there shall be no new charges on the account.

The Judge Gave My Spouse the Credit Card Debt but my Spouse Never Paid, Now the Bank Is Telling me I have to Pay. Do I?
Whether the debt is awarded by agreement or court order, if it is not paid and you were an account holder in any way (not including just an authorized user) the bank can and will hold you liable if your spouse does not pay the debt. The theory is that the bank is not a party to your divorce action and it extended the credit to both of you so both of you continue to owe the debt. You do, of course, have an action against the other spouse.

My Spouse Was Ordered to Pay Credit Card Debt but Did Not. Can I Keep Money Back from Child Support to Pay it Myself?
No, you cannot pay the credit card debt and deduct the payment you made on the credit card debt from your monthly child support obligation.

There are a lot of issues which may arise in the distribution of property; and many of them are very complex. We urge you to consult with an attorney. And for more detailed information, see the articles on the website on this topic.