11 Factors You Need to Know About Equitable Distribution

In longer marriages, it’s common for couples to have a higher degree of financial intertwining and to have jointly contributed to the accumulation of assets.

For example, if a couple has been married for 20 years, they may have purchased a home together, built retirement savings, and accumulated investments using marital funds. In such cases, the court may view most of those assets as joint efforts and may be more inclined to distribute them evenly between the spouses.

By contrast, for shorter marriages, a judge may look more closely at what property each spouse brought into the marriage or acquired independently. If one spouse owned a home, investments, or business interests before the marriage and the couple separated only a few years later, the court may place greater weight on maintaining that spouse’s separate property. Here, the distribution of marital assets may reflect the relatively brief financial partnership.

3. Both parties’ age and health

Courts also consider the physical and emotional condition of each spouse. When a spouse faces considerable health challenges, their financial requirements following the separation might be more extensive. The court may then determine that a slightly larger portion of marital assets is appropriate.

Age can also be relevant. A spouse nearing retirement may have fewer opportunities to rebuild financial stability after the marriage ends.

4. Tax consequences of dividing marital property

Another factor courts may consider is the tax impact of property division. Some assets may appear equal in value at first glance but carry different tax consequences. For instance, withdrawing money from certain retirement accounts could trigger income taxes or penalties, while transferring ownership of real property will fall under the classification of capital gains taxes.

In such a scenario, courts sometimes structure property division in a way that minimizes unfair tax burdens for one party. A judge may also consider whether the proposed division could create unexpected tax liabilities for either spouse.

Taking tax consequences into account helps the court reach a more equitable distribution of the marital estate, rather than focusing only on the face value of the assets.

5. Non-monetary contributions to the marriage and marital property

Contributions to a marriage aren’t always measured in dollar amounts. Courts recognize that spouses contribute to the marriage in different ways. 

One spouse may earn most of the primary income, while the other contributes the following:

• Managing the home and family responsibilities
• Supporting the other spouse’s career or education
• Helping grow business interests or professional practices
• Contributing income used to purchase marital assets

While courts do not assign a specific dollar value to household work or parenting, they do recognize that these efforts often make it possible for the other spouse to earn income or build assets during the marriage. Because of this, a judge may consider both financial and non-financial contributions when deciding what a fair division of marital assets looks like.

6. The value of marital property and divisible property

The court is required to establish the value of all assets before they can be distributed. This includes both marital property and divisible property, which refers to certain financial changes that occur after the date of separation but before the divorce is finalized.

Examples of divisible property may include:

• Fluctuations in the value of passive investments
• Income generated from marital assets after separation
• Certain financial gains tied to marital property

7. Marital debt and debts acquired during the marriage

Property division includes both assets and obligations. Courts must determine how marital debt will be distributed between spouses. Debts may refer to:

• Credit card balances
• Mortgages or home equity loans
• Vehicle loans
• Business-related debts
• Other liabilities acquired during the marriage

Just like marital assets, debts must be divided in a way that the court considers fair under the circumstances.

8. Real property and major marital assets

Some assets tend to carry more weight in an equitable distribution case simply because of their value or long-term financial impact. While the marital home is often the most significant asset, the following also play a crucial part in financial settlements:

• Real property
• Retirement accounts
• Investment portfolios
• Ownership interests in businesses
• Other high-value items accumulated during the marriage

In many marriages, both spouses contribute to acquiring or maintaining these assets, even if only one person’s name appears on the title or account. One spouse may earn the income used to purchase the asset, while the other supports the household or helps manage finances.

Because of this shared contribution, these assets are often treated as marital property under North Carolina law.

9. Business interests and professional practices

When a marriage involves business ownership, property division becomes more complex. Even if only one spouse formally owns the business, the court will still consider it marital property if it was developed during the marriage.

This often applies to:

• Small businesses
• Medical or legal professional practices
• Family-owned companies
• Other entrepreneurial ventures

Because it can be difficult to attach a nominal value to these assets, financial experts are sometimes needed to determine their worth.

10. Marital misconduct and financial misconduct

Although North Carolina focuses primarily on fairness rather than fault, certain behavior can still influence how property is divided.

For instance, financial misconduct may come into play if one spouse tries to manipulate the marital estate during the divorce process. This could include:

• Hiding marital funds, such as transferring money into undisclosed accounts or failing to report income or assets during the proceedings.
• Transferring assets to avoid distribution, such as quickly selling or gifting property to a friend or relative in an attempt to keep it out of the marital estate.
• Excessive spending that reduces the marital estate, such as draining savings accounts, running up credit card balances, or making unusually large purchases over the course of the separation process.

Courts may also consider certain forms of marital misconduct if they directly affect the couple’s finances. Severe substance abuse that leads to substantial financial losses, unpaid bills, or depletion of marital assets could become relevant in an equitable distribution case.

If the court finds that one spouse intentionally wasted or depleted marital property, a judge may adjust the distribution to compensate the other spouse for those losses and restore a more equitable outcome.

Related reading: Can I Stop My Spouse From Spending Money During the Divorce?

11. Attempts to maintain or waste assets post-date of separation

Finally, courts will take into account whether either spouse has attempted to maintain or to waste the marital estate after the date of separation.

Secure your financial future

Navigating an equitable distribution in a divorce requires a deep understanding of North Carolina statutes and a meticulous eye for detail. The classifications of your assets will define your financial life for years to come, whether you are dealing with real property, retirement accounts, or professional practices.

Ellis Family Law’s experienced attorneys are dedicated to ensuring a fair division of your marital property. We help you determine what property is separate, what is marital, and how to advocate for an equal distribution when the circumstances demand it. Consult with us today.