Equitable Distribution, in a nutshell, is giving each party to a marriage what they are entitled regarding property acquired during the marriage. As one of the pillars of many divorce proceedings, it is commonly the most complex aspects, requiring extensive research into the lives of individuals going through a divorce. In some instances, the parties to a divorce can amicably agree as to how the property acquired during the marriage shall be distributed, and in some instances where parties fail to agree, distribution may be simple due to the nature, amount, and availability of information regarding marital property. In other instances, the parties cannot agree, and the marital assets are numerous, complex, and difficult to find; this situation can create a very tall task for attorneys in properly representing client interests.
A recent North Carolina case, Uli v. Uli (N.C. App., 2017), breaks down equitable distribution in an effort to comprehensively explain how North Carolina courts are to handle these types of claims. North Carolina courts conduct a three-step analysis to determine what is marital property, what is divisible property, and how to provide for an equitable distribution between the parties. First, the court must identify and classify the property as marital or separate based upon evidence presented regarding the nature of the asset. Next, the court must determine the net value of the marital property as of the date of separation. Lastly, the court must distribute the marital property equitably. Smith v. Smith, 433 S.E.2d 196, 202-203 (1993).
The primary issue presented in Uli is the classification of real property in dispute throughout the proceedings. Classifying property in an equitable distribution case is no walk in the park. Courts must determine whether property is marital or separate. Marital property is “all real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of separation of the parties, and presently owned, except property determined to be separate property or divisible property…” Separate property is “all real and personal property acquired by a spouse before marriage or acquired by a spouse by devise, descent, or gift during the course of the marriage…” N.C. Gen. Stat. §50-20(b)(2015). “Acquired” is the key term in both definitions. North Carolina courts have adopted a “dynamic” interpretation of the term “acquired” as the courts recognized that acquisition is an on-going process of making payment for a property or contributing to the marital estate, instead of being fixed on the date that legal title to the property is obtained. Wade v. Wade, 330 S.E.2d 616 (1985). With this interpretation, the court realizes that property may have a dual nature consisting of both “separate” and “marital” qualities.