North Carolina Divorce Lawyers Blog

Articles Tagged with Equitable Distribution

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Carolyn Woodruff, JD, CPA, CVA
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In re Jeffers, No. 14-52328,    B.R., 2017 WL 2838104 (Bankr. N.D. Ohio June 30, 2017)

Facts: A husband and wife divorced in Ohio. The divorce decree awarded the wife an interest in the husband’s retirement benefits.

Before a DRO was entered, the husband filed a petition in bankruptcy under Chapter 13. When a bankruptcy case is filed, all state court actions are automatically stayed. 11 U.S.C. § 362. The wife asked the bankruptcy court to lift the stay so that she could obtain a DRO in state court. The bankruptcy trustee objected.

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Carolyn Woodruff, J.D., C.P.A, C.V.A.
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Garcia-Tatupu  v.  Bert  Bell/Peter  Rozelle  NFL  Player  Ret.  Plan,  No.  CV 16-11131-DPW,     F. Supp. 3d   , 2017 WL 1398645 (D. Mass. Apr. 18, 2017)

Facts: The husband, a former NFL football player, was divorced from his wife in Massachusetts in 1997. No DRO was entered at the time. The husband died in 2010; he had not remarried. In 2012, the Massachusetts court issued a DRO, nunc pro tunc back to 1997.

The wife requested benefits from the plan under the DRO, the plan denied benefits, and the wife sued the plan. The plan filed a motion to dismiss.

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Carolyn Woodruff, J.D., C.P.A, C.V.A.
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Dullea v. Pension Benefit Guar. Corp., 241 F. Supp. 3d 155 (D.D.C. 2017)

Background: There are two ways in which state courts can make a deferred future division of retirement benefits. The traditional method is the shared interest approach, which awards the nonowning spouse a portion of each future payment received by the owning spouse.

A less traditional but also permissible option is the separate interest approach. With the separate interest approach, the nonowning spouse is awarded a separate and distinct set of benefits under the plan, with a value equal to a stated percentage of the actuarial value of the owning spouse’s benefits. (Actuarial value is the total future benefits expected, times the chance of death before receiving them.) The owning spouse’s benefits are then reduced proportionately.

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            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.

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The two big classifications of property in all equitable distribution cases are “marital” and “separate” property.  These are the ones the get all the attention and are subject to some of the most intense scrutiny and debate; however, there is a third area of property that is equally as important and can at times, prove to be a valuable player equitable distribution cases. Yes, I am talking about “divisible property!”  Continue reading →

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A great aspect of living in the triad area is the rich history of successful businesses that put down roots in the community and prospered over the years.  Greensboro is home to very familiar brands such as Wrangler and Volvo, and right down the road is High Point, which is known for being one of the largest home furnishing manufacturing areas in the country.  Business and industry have been drawn to the area for years, and a growing population provides ample opportunity for entrepreneurs of all sizes to flourish.  Some of the area’s most vital businesses are ones defined as “closely-held,” or more commonly referred to as, “Mom and Pop” businesses.  Unfortunately, sometimes, Mom and Pop do not see eye-to-eye, which may jeopardize the future of these businesses. Continue reading →

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Dear Carolyn,

I have a family member who is separated. Before the separation, this person purchased a house with the deed only in her name and the deed of trust in both names. How will the courts view this property for equitable distribution? My family member thinks that since the property is only in her name that the other party has no rights under equitable distribution. Can you explain the difference between Deed and Deed of Trust?

Thanks

 

Carolyn Answers:

This is a very interesting and quite technical question. So, thank you for writing.  I’ll start first with the definitions of deed and deed of trust.

A deed is the ownership or title documents; by analogy, your car title is a title document for a car like a deed is the title document to your home. Thus, the deed states who owns the home, and generally on the deed the owner is referred to as the grantee. This ownership document (deed) is registered at the Register of Deeds.

A deed of trust is the security for the debt or Promissory Note. When you buy a home or get an equity line on your home, you sign a Promissory Note to the lender. At the time of borrowing, you also sign a document called a deed of trust as security (a lien); if you do not pay the Promissory Note, the signatures on the deed of trust allow the lender to foreclose on the home and take the home away from you. If you examine the deed of trust, you will notice that the lender is the beneficiary of the deed of trust, and that there is a trustee. It is the trustee that forecloses if the Note is not paid. When the Note is completely paid, the lender is required to cancel the deed of trust on the public record at the Register of Deeds. We are one of about twenty states that use the “deed of trust” system.  The majority of states use a “mortgage” system.

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Dear Carolyn,

My wife and I have been married 20 years. Our child is graduating from high school this year, and we are miserable.  We own a home with lots of debt and we cannot afford to separate without selling our home first.  We both work, but there simply is not enough money to maintain two households without first selling the house.  Is there any way we can declare ourselves separated and maintain the same household until the house sells?   Why is the North Carolina waiting period for divorce a year?  I hear that one year is a long time as compared to other states.  Can we settle our property now?  We have retirement, cars and furniture, along with the house?

 

Carolyn Answers:

Generally, North Carolina requires 365 days of separation, with the intent of one spouse to live separate and apart forever, before a spouse may apply to the court for an absolute divorce. Separation in this state means, literally that the spouses, during separation, must have separate residences and essentially, conduct themselves as single for the entire 365 days. Isolated incidences of sexual intercourse, such as a weekend at the beach with an estranged spouse, do not start the 365 day period over.

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Jennifer A. Crissman, Attorney
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Timing, as they say, is everything, and if you are appealing an Order in North Carolina, this is particularly true. Slaughter v. Slaughter, No. COA16-1153 was decided by the North Carolina Court of Appeals on July 18, 2017. While there were multiple issues on appeal, the issue that sticks out is the timing and issues allowed on cross-appeal.

Cross-appeals are not a rarity. However, the Court had an issue of first impression on whether a cross-appeal should have been dismissed by the trial court. In Slaughter v. Slaughter, the trial court entered an Order Equitable Distribution on March 31, 2016, and Orders on Child Support, and Alimony on April 1, 2016. The husband filed a Notice of Appeal from the Alimony and Equitable Distribution Orders on April 25, 2016, within the thirty-day window for filing.

Wife filed a Notice of cross-appeal on May 3, 2016, from the Child Support Order and the Equitable Distribution Order. While Wife was within the ten-day window for filing a cross-appeal, Husband filed a Motion to Dismiss her cross-appeal regarding the Child Support Order. Husband argued that the ten-day window for filing a cross-appeal under NC Rule of Appellate Procedure 3(c) should not apply as Husband did not appeal the child support order. Husband’s Motion to Dismiss was denied by the trial court, which Husband appealed.

Husband’s argument on Appeal is that firstly, Wife was outside of the thirty-day window to appeal the Child Custody Order, and secondly, that since Husband had not appealed from the child custody order in his timely appeal, Wife should not be allowed to cross-appeal the Child Support Order. It was a matter of first impression if a Notice of Appeal is limited to only the Order specifically designated in the Notice, where a single proceeding has resulted in multiple Orders. It was also a matter of first impression if a cross-appeal is similarly limited to only the Order specified in the original Notice.

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Dear Carolyn,

I am involved in an equitable distribution case and I have a closely-held business in the Triad, which was started by my father. He still owns the majority of the business.  Eight years ago, my father gave me twenty-five percent of the business. I separated from my husband eight months ago. What can I expect in my divorce case related to my closely held business?  How do we go about getting a appraiser to appraise the business?  Can he get any of my stock in the family business?

 

Carolyn Answers:

 You ask a complex, but very interesting, question.  Rest assured that he cannot get any of the actual stock in your family’s business.  The stock itself is separate property because it was given to you by your father.

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