How Property Distribution Works

In the equitable distribution process in North Carolina, four steps must be taken. First, the assets and debts must be identified. Second, the assets and debts must be classified as either separate, marital or divisible. Third, assets and debts must be valued. The fourth and final step is to fairly distribute the assets between the spouses.

Property is classified as being either separate property, marital property or divisible property. Most property falls into either the separate or marital property classifications.

Separate property is not open to distribution. It consists of assets and debts owned by a spouse prior to marriage which can be identified as such. Inheritances and gifts from third parties are also considered separate property. Also, property acquired after date of separation is separate property so long as it was not purchased with marital funds.

Marital property is subject to distribution. It consists of all assets and debts acquired by the spouses during the marriage (except gifts and inheritances). Gifts made to each other by the spouses are usually considered marital property unless they were specifically identified as separate property by the gifting spouse at the time the gift was made.

Divisible property is a special category. It is property which accrues to the divorcing couple post separation and before the divorce is final. It is property that is acquired after the date of separation and prior to the final distribution of the property. Divisible property usually consists of increases or decreases in marital property value or interest on marital investments or commissions. It also includes increases or decreases in marital debt.