Desai v. Desai, No.COA20-435 (July 2021) (unpublished)
An interim distribution is an order of the court that can be entered anytime after the filing of the equitable distribution (ED) claim and before the final judgment on equitable distribution. In these interim orders, the court can classify, value, and distribute certain assets or debts. This partial distribution can also provide for a distributive award that one party pays the other in exchange for the distribution of an asset or debt. So how does this affect the final judgment? Below is a case that explains simply what should happen.
- Facts: Husband and Wife separated. The couple owned a consulting business, with Husband being the first consultant. They planned on expanding and hiring more employees, but never got around to it. The business incurred tax debts of roughly $14,000. Wife paid this tax debt after separation. When Wife filed her claim for ED, she also motioned for an interim distribution of that business to Husband. As part of that distribution, Wife also wanted to be reimbursed for her payments on the tax debt. Husband was distributed the business and was ordered to pay a distributive award adding up to $14,000. These interim distributions were not credited to Husband when the trial court ordered a final judgment in which Husband was to pay a distributive award to wife. Husband appealed.
- Issue: Was it an error on the part of the trial court when it failed to credit the interim distribution into the final judgment?
- Holding: Yes
- Rationale: Husband and Wife agreed on two interim distributions that ultimately paid Wife $14,000 for reimbursement of her tax payments. Husband failed, somehow, to denote that he ended up paying the tax liability in the end through this interim distribution. Husband, however, did testify that he paid Wife this $14,000. No finding of fact indicated that the trial court properly credited Husband for these distributions, which would have potentially removed $14,000 from the distributive award. This is a simple application of the statute: any such interim distribution order shall be taken into consideration at the ED trial, and proper credit for the interim distribution will be given.