North Carolina Divorce Lawyers Blog
Published on:

Equitable Distribution and Separate Property

By

DONATI V. DONATI, 2023-NCCOA-________ (2023) (unpublished). 

  1. Facts: Husband and Wife separated and a claim for equitable distribution was filed by Husband, who claimed that he ought to receive more than fifty percent of all marital and divisible property. Husband contended that he sold his separate residence, a house owned before the marriage, and then put about $60,000 of those proceeds into the marital home. The trial court found that an in-kind distribution was equitable, and that an equal division was not. Husband appealed and argued that he was entitled to the return or reimbursement or credit for the $60,000 that he claims was his separate contribution to the marital property. 

 

  1. Issue:  Did the trial court err denying credit/reimbursement/repayment of the $60,000? 

 

  1. Holding: No. 

 

  1. Rationale:  A trial court is required to classify, value, and distribute marital and divisible property. The division should be equal unless equal division is inequitable. A list of factors in NCGS 50-20 can be considered for an unequal division. Classification must be supported by findings of fact. In this case, the property in contention was the marital residence. Under a source of funds approach, each parties’ interest in the residence should comprise of a ration of what each party separately contributed to the residence in comparison with the total investment in the property. The evidence that is required to make the requisite finding is some form of a tracing of funds. In this case, Husband would have needed to show that $60,000 of the proceeds of his separate property were used to acquire the marital residence because the marital residence was classified as marital property—the burden shifted to him to prove any separate interest in the residence. He did not provide any tracing to show the application of a separate $60,000 to the purchase of the marital residence. Bank account statements showing the deposit of funds and the use of those funds would have likely sufficed. But this was not done, so the trial court did not abuse discretion by finding the marital residence to be marital property.