The individual states in America have devised two basic methods of dividing marital property. A few states have adopted what is called “community property laws.” In these states, the property and debts acquired by the couple during the marriage must be divided equally. Most of the states, however, have adopted the equitable division approach, that is, the marital estate must be divided fairly between the spouses. South Carolina uses the latter approach to divide marital property.
In dividing a couple’s property, the court must first separate the assets into “marital assets” and “non-marital assets.” Non-marital property includes the following:
- Property acquired by a spouse before the marriage;
- Property acquired by a spouse through inheritance or gift to the spouse alone during the marriage; or
- Property excluded from marital property by a written contract or prenuptial agreement.
All remaining property – usually the bulk of the couple’s assets – is considered marital property and is subject to the rule of equitable distribution. In dividing marital property, the court is guided by a number of factors:
- The length of the marriage
- Any marital misconduct such as abuse or misconduct
- Value of the marital property
- The respective contribution of the spouses to the acquisition and appreciation of various assets
- The physical and emotional health of each spouse
- The need of either spouse for education or training to enhance earning power
- Non-marital property owned by each spouse (for example, a gift or inheritance received during the marriage)
- Whether either spouse has vested retirement benefits
- Alimony or support received from a prior spouse
The court can also consider any other factors that are considered to be relevant to property division. These factors may include whether one spouse acquired assets illegally or hid assets in foreign bank accounts. Failing to divulge pertinent information about assets during the divorce proceeding may also cause a judge to award a greater share of assets to the truthful spouse.
Some assets present special problems. Rare works of art may be difficult to value. A retirement plan funded by a closely held corporation may also be difficult to value. Commercial real estate owned in part by one of the divorcing spouses and a third party presents problems in separately valuing the spouse’s interest.
Some valuation problems can be resolve by relying on expert witnesses. For example, a large residence may require the services of a real estate appraiser to determine its value. A retirement plan that will vest several years in the future may require the opinion of an accountant or financial adviser in order to divide it fairly.
Anyone contemplating a divorce, especially if the couple has extensive assets, may wish to consult a knowledgeable divorce attorney for an explanation of North Carolina’s property division laws and how those laws will be applied by the court.