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Division of Marital Property

When it comes to the division of marital property, one question we are commonly asked is what happens if the value of an asset, such as a home, increases during the pendency of the case? In North Carolina, there is a specific provision of the law addressing this exact scenario: divisible property. 

Divisible property is a term within North Carolina’s equitable distribution laws that relate to the distribution of assets and liabilities in a separation and divorce.  

Under North Carolina law, marital property must be divided equitably between the spouses in the event of a divorce. This means that the property is divided in a way that is fair and just, taking into account several factors such as the duration of the marriage, the income and property, and liabilities of each spouse at the time of division, and factors that consider contributions of each spouse to the marriage. 

Divisible property, on the other hand, is a separate category of property that is subject to distribution but is not within the definition of marital property. This category includes assets and liabilities that were acquired or incurred by either spouse after the date of separation but before the date of distribution, as well as any changes in marital property values that occurred during this time period. 

Some examples of divisible property in North Carolina are: 

– Any increase or decrease in the value of marital property that occurred between the date of separation and the date of distribution, such as changes in the value of stocks, real estate, or business interests. The important distinction is whether the change in value is due to direct action of a spouse post-separation. 

– Income earned by either spouse after the date of separation but before the date of distribution, including bonuses, commissions, and other forms of compensation. Importantly, the income will need to stem from efforts expended during the marriage. Commonly, commissions or bonuses fall into this category. 

– Tax refunds, insurance payouts, or other assets that were received after the date of separation but before the date of distribution. 

– Debts or liabilities increases, such as interest, that were incurred by either spouse after the date of separation but before the date of distribution, such as marital credit card debt, medical bills, or mortgage payments. 

The purpose of including divisible property in the equitable distribution process is to ensure that both spouses are treated fairly and that any assets or liabilities acquired after the date of separation are considered when dividing property.