Equitable Distribution and Gifts

Can a house be a “gift?”  What is Marital Property? Under the family laws for NC Equitable Distribution and Gifts, a Charlotte home (Denver NC residence) was determined to be marital property in Bond v. Manfredo.

Equitable Distribution involves the classification and distrubution of things like homes, bank accounts, personal property, 529 College Savings Plans, and retirement accounts.  It is relatively complicated and often involves substantial sums of money – Bill Powers, Charlotte Divorce Attorney 

Property distribution as part of a divorce is handled pursuant to North Carolina General Statutes and is not part of Common Law.  Under N.C.G.S. Chapter 50, the family law statute, in handling the equitable distribution of what divorce lawyers may refer to as the “marital estate” or “marital property” (marital assets), the judge is required to follow a 3-step process:

1. Determine what assets are marital property; and then,
2. Figure out the net value of the property (Debts/encumbrances substracted from FMV Fair Market Value; and then,
3. In an equitable fashion, distribute the property

Once a party makes an application for Equitable Distribution in Family Court, the Judge is required to determine what property is divisible property and marital property of the parties.  North Carolina Family Laws – Distribution of Property

The family laws of North Carolina also require the Judge write a detailed and specific Order, such that the Court of Appeals (the reviewing court) can determine what was done, how Equitable Distribution was handled, and whether the decision was legally correct.

Equitable Distribution – Discretion of the Court

With few exceptions, Divorce in North Carolina is handled in District Court “Family Court.”  Unlike other legal matters like a lawsuit in an accident case or contract dispute, the “amount in controversy” is not alleged in a Complaint for Divorce.  For example, “small claims” in North Carolina are legal disputes under $10,000.  District Court Civil Trials are limited to $25,000 in value and Superior Court Trials involve legal claims in excess of $25,000.  See:  Rules of Civil Procedure in North Carolina

As such, District Court Judges decide who gets the kids, visitation, support, and property distribution.  That means juries in North Carolina do not decide family law issues involving equitable distribution.  And those Family Court judges are given broad discretion in making their rulings.  Put simply, but for an abuse of discretion, the Court’s Order will not be overturned.

Charlotte Divorce Lawyers may refer to that as the “abuse of discretion” standard, where the Court’s ruling will not be “disturbed” except in instances where the legal ruling and judgment of the court is “unsupported by reason” and “could not have been the result of competent inquiry.”  Failure to follow the family laws in North Carolina (failed to comply with statute) can be an abuse of discretion.

Gifts to the Marital Estate – Gift of a Home

The NC Court of Appeals (NCCOA) ruled on August 21, 2018 in Bond v. Manfredo that use of the husband’s personal funds amounting to over $200,000 was a gift to the marriage.  The husband and wife were married in 1999 and separated in 2014.  In reviewing the legal ruling of the Hon. Sean P. Smith (a Charlotte NC District Court Judge), the NCCOA concurred with finding that the marital home was indeed a marital asset and therefore subject to Equitable Distribution.

The Husband in the case provided evidence, through personal testimony, that he never meant to make the home a gift to his wife and that her name was added to the Deed of Real Property because the closing attorney and real estate agent said her name had to be included.

Judge Smith found, in his Findings of Fact that, “the property was obtained and purchased for the joint benefit of the parties.”  He additionally found the husband, “undoubtedly intended to make a gift to the marriage of the marital home.”

What is Marital Property in North Carolina?

Once again, what is and what is not marital property in North Carolina is defined by statute, which states in relevant part, “It is presumed that all real property creating a tenancy by the entirety acquired after the date of marriage and before the date of separation is marital property.”

Property is considered a gift, under the family laws, “only if such an intention is stated in the conveyance.”  The conveyance, which is a transfer of legal ownership, may be inferred when one spouse uses what otherwise may normally be categorized as “separate funds” to purchase property titled to both parties in a marriage as husband and wife (tenancy by entirety).

Bill Powers – Charlotte Divorce Attorney

If you have questions about the financial effects of a separation and divorce, especially given the potential long term consequences of such substantial figures, it makes sense to retain legal representation.  Bill Powers is here to help.  CALL NOW: 704-342-4357