Is Property Acquired During Marriage Always Considered Marital in Equitable Distribution?

Equitable distribution can be requested in North Carolina divorces, which means the court will determine the fairest way to divide assets and debts rather than dividing property evenly. The presumption is typically that any property acquired during marriage is considered marital property and therefore is subject to equitable distribution. However, there are exceptions such as inheritance and certain gifts.

The marital property rule can also be overcome in some cases, which is what occurred in Roberts v. Kyle.

Roberts v. Kyle

Husband and Wife were married in 1998 and separated in 2014; a claim for divorce was filed in 2017. Before an equitable distribution hearing could be held, Wife passed away, and the executor of her estate was substituted to continue the matter in her place. The main issues with equitable distribution in this case centered on real estate and personal property owned by Husband and his cousin, specifically numerous tracts of land in a subdivision that was begun prior to marriage.

Husband and his cousin first acquired 13.9 acres of land in 1997, which they intended to turn into a subdivision called Tar Kiln Ridge. The first lot was sold a few months prior to the marriage. Even though all subsequent lots were sold during the Husband’s marriage to Wife, the trial court found that Husband overcame the presumption that the lots were marital property. The court’s decision was based on the fact that no marital funds were used to acquire the land or repay the indebtedness on the property. Each payment toward the debt on Tar Kiln Ridge came directly from the sale of a lot on the property, the funds for which were originally separate property prior to marriage.

Appeal by Wife’s Estate

John Kyle, the executor of Wife’s estate, appealed the trial court’s equitable distribution order that allocated this property to Husband. The estate claimed that the trial court mistakenly classified the real and personal property as separate property.

There was no evidence presented that showed Wife contributed to the development of the subdivision, and the increase in value was due to the effort and contributions of Husband and his cousin. Husband also presented evidence to support his claim that the property was acquired with his separate property alone. For example, Husband and Wife kept their finances separate during the marriage, and Husband used savings he’d begun accumulating as a child to pay a portion of the down payment on the property. The appellate court affirmed the lower court’s equitable distribution ruling.

For help with your equitable distribution case, contact the experienced attorneys at Woodruff Family Law Group.