How Equitable Distribution Agreements Work

  1. Separation & Divorce
  2. How Equitable Distribution Agreements Work
How Equitable Distribution Agreements Work

North Carolina divides property under an equitable distribution model. This method essentially takes the net market value of all property and debt attained between a couple’s date of marriage and date of separation and allows a court to make a fair and equitable division of that property. While this generally begins at a 50-50 split between spouses, courts have a great deal of discretion in what they may consider in making an unequal split.

This includes:

  1. The income, property, and liabilities of each party;
  2. Support obligations from a prior marriage;
  3. The duration of the marriage and the age and health of each spouse;
  4. Who has custody and who thereby needs to remain in the marital home;
  5. A spouse’s retirement or pension that is not marital property;
  6. Any equitable claim or contribution made to the acquisition of marital property by the spouse who does not have the title;
  7. Any direct contribution to the increased value of separate property;
  8. A spouse’s contribution to the education or earning potential of the other spouse;
  9. The liquidity of marital property—how easily it is converted to cash or how quickly it can be dealt;
  10. The complexity of appraising the value of a business, corporation or profession, and the economic desirability of retaining such asset or interest;
  11. The tax consequences of selling all property, based on the value at the time of the appraisal;
  12. Acts of either party to maintain, preserve, develop, or expand; or to waste, neglect, devalue or convert the marital property or divisible property;
  13. “Any other factor which the court finds to be just and proper”.

Equitable Distribution Agreements Offer Predictability

The variety and scope (e.g., “any other factor”) of the court’s discretion can give way to a sizeable and unpredictable deviation from a 50-50 split. Therefore, rather than leave this big financial decision to a court, divorcing couples (and their attorneys) are required to first attempt to reach a peaceful resolution to dividing marital property via an equitable distribution agreement.

Courts and public policy both prefer that parties make agreements, as it is a more harmonious resolution and saves countless hours for courts to handle other matters. The Legislature has therefore provided that “before, during or after marriage,” a couple can create written agreement—that if duly executed and acknowledged—can provide for the distribution of marital and/or divisible property in a manner that the parties determine to be equitable. This agreement becomes legally binding and must be approved by a court unless it violates the law or public policy.

An agreement can help both parties realize their goals, such as allowing one spouse to take full ownership of a business interest, while the other spouse gets other property like real estate to balance out their distribution. Or, one spouse can retain the marital home, while the other spouse retains their entire retirement and pension accounts. The mutual benefit of such an agreement often outweighs the risk of a trial where neither spouse walks away satisfied.

Let New Direction Family Law Assist You

New Direction Family Law provides high-quality legal representation for men and women seeking a divorce. Our attorneys are experienced, thoughtful, and detail-focused. If you want an attorney who will fight for your legal rights and look out for your financial interests, contact us. We have successfully handled equitable distribution settlements and trials at all levels of wealth and complexity. Our firm serves clients in Wake, Johnston, Durham, and surrounding counties. Call New Direction Family Law at (919) 719-3470 to schedule a consultation or visit us online at our website.

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