Does Fault Play a Role in Equitable Distribution?

Marital fault or the misconduct of either party is not relevant in determining the division of assets in North Carolina for Equitable Distribution unless the marital misconduct has had an economic impact on an asset within the marital estate.

Smith v. Smith is the authority that keeps fault out

In North Carolina the rule that marital fault is irrelevant to property division comes from Smith v. Smith, 314 N.C. 80, 331 S.E.2d 682 (1985), where the North Carolina Supreme Court held that conduct which does not affect the economic condition of the marriage cannot be considered under the catch-all distributional factor. The Court of Appeals has applied that holding consistently since, including in Fountain v. Fountain, 148 N.C. App. 329, 559 S.E.2d 25 (2002), which states directly that marital fault without economic consequences is not properly considered under G.S. 50-20(c)(12).

The reasoning follows the structure of the statute. The factors G.S. 50-20(c) lists are directed at the economic circumstances of the marriage: the income, property and liabilities of each party at the time the division becomes effective, any obligation for support arising out of a prior marriage, the duration of the marriage and the age and physical and mental health of the parties, direct and indirect contributions to the acquisition of marital property, contributions to the education or career development of the other spouse, the liquid or non-liquid character of the estate, and the tax consequences to each party. The catch-all in G.S. 50-20(c)(12), “any other factor which the court finds to be just and proper,” is read in the light of that company rather than as an open invitation.

What North Carolina courts mean by marital fault

Marital fault in this context is conduct that undermines the marital relationship rather than the marital balance sheet. Hinton v. Hinton, 70 N.C. App. 665, 321 S.E.2d 161 (1984), described it as cruelty, abandonment, adultery or indignities, and held that a trial court had improperly taken into account evidence that a husband had physically abused his wife when deciding how to distribute the property.

The same limit has been applied to abandonment. In Coleman v. Coleman, 89 N.C. App. 107, 365 S.E.2d 178 (1988), the court could not consider the fact that the husband had abandoned his wife, although it could consider how his conduct dissipated the value of the marital home. The distinction is not between blameless and blameworthy behavior. It is between behavior that changed the value of the estate and behavior that did not.

Conduct that reduces the value of the estate is a different question

Misconduct during the marriage that dissipates or reduces the value of marital assets for non-marital purposes is a proper distributional factor, and Smith v. Smith itself drew that line. North Carolina courts have taken account of a spouse who looted the estate and disposed of the other spouse’s separate property, in Glaspy v. Glaspy, 143 N.C. App. 435, 545 S.E.2d 782 (2001), and of a spouse who converted funds from the parties’ close corporation to the point that the corporation failed, in Wornom v. Wornom, 126 N.C. App. 461, 485 S.E.2d 856 (1997).

Two presumptions temper this. Wornom recognized a presumption that each spouse consents to the other’s withdrawals from a joint account, and a presumption that funds drawn from a joint account were used to sustain the family. Both can be rebutted, but they mean that ordinary spending from a shared account is not treated as dissipation without proof of what the money actually did.

Postseparation conduct has its own factor

Conduct after the parties separate is dealt with expressly. G.S. 50-20(c)(11a) puts before the court “acts of either party to maintain, preserve, develop, or expand; or to waste, neglect, devalue or convert the marital property or divisible property, or both, during the period after separation of the parties and before the time of distribution.” Like every factor in the subsection it is weighed inside the question whether an equal division would be equitable, and where evidence is offered on it the court must consider that evidence and make a finding. It cuts both ways: a spouse who kept up the mortgage, insurance and routine maintenance on the marital residence can raise it, as in Peltzer v. Peltzer, 222 N.C. App. 784, 732 S.E.2d 357 (2012).

The factor still requires an economic effect. Under Walter v. Walter, 149 N.C. App. 723, 561 S.E.2d 571 (2002), property is wasted, neglected, devalued or converted only if, at the time of distribution, it is either unavailable for distribution or has decreased in value from its date-of-separation figure as a result of the spouse’s acts. Removing furniture from the marital home was not enough where there was no evidence that the removal affected the value of the estate.

Criminal conduct is treated the same way. In Troutman v. Troutman, 193 N.C. App. 395, 667 S.E.2d 506 (2008), the trial court properly considered damage a husband caused to the marital home, and made clear on the record that it was not considering his actions against his wife, only his actions against the property.

Conduct during the litigation counts only if it costs money

Behavior during the case itself follows the same economic test. Where misconduct in the litigation causes the other party to incur additional expense, the court may take that increased expense into account in making a distributive award, as in Shoffner v. Shoffner, 91 N.C. App. 399, 371 S.E.2d 749 (1988). A court has also properly considered that a spouse secreted marital funds and attempted to devalue the estate, in Albritton v. Albritton, 109 N.C. App. 36, 426 S.E.2d 80 (1993).

Litigation misconduct unrelated to the marital economy is out. In Wade v. Wade, 72 N.C. App. 372, 325 S.E.2d 260 (1985), failure to comply with discovery orders, falsified documents and untruthful testimony were not proper distributional factors in themselves, although G.S. 50-21(e) provides a separate sanctions remedy for wilful obstruction and unreasonable delay.

Fault is not irrelevant everywhere in a North Carolina family case

The exclusion of fault is specific to property division. Alimony under G.S. 50-16.3A works differently, and it works conditionally. The court reaches the question only where it has found that one spouse is a dependent spouse and the other a supporting spouse and that an award would be equitable; subsection (b)(1) then makes the marital misconduct of either spouse one of the factors going to the amount, duration and manner of payment. Subsection (a) adds two findings that control the outcome rather than color it. Where the court finds that the dependent spouse participated in an act of illicit sexual behavior, as defined in G.S. 50-16.1A(3)a., during the marriage and before or on the date of separation, it shall not award alimony; where it finds the same of the supporting spouse, it shall order that alimony be paid to a dependent spouse; and where it finds that both participated, alimony is denied or awarded in the discretion of the court after considering all the circumstances. An act of illicit sexual behavior that has been condoned by the other party is not considered at all.

The two claims are kept apart deliberately. G.S. 50-20(f) requires the court to provide for an equitable distribution “without regard to alimony for either party or support of the children of both parties,” and only afterwards to consider on request whether an existing support order should be modified. Evidence of an affair may therefore be central to one claim in the same courthouse and inadmissible on the other.

Common questions

Does adultery affect property division in North Carolina?

Not by itself. Under Smith v. Smith, 314 N.C. 80 (1985), marital fault that has no economic effect cannot be weighed under G.S. 50-20(c)(12), and Hinton v. Hinton, 70 N.C. App. 665 (1984), lists adultery among the kinds of conduct that fall outside the analysis. Where marital funds were spent on the affair the spending itself may be considered as dissipation of marital assets for a non-marital purpose.

Can a North Carolina judge divide property unequally because one spouse left the marriage?

No. Coleman v. Coleman, 89 N.C. App. 107 (1988), holds that a court cannot consider the fact that a spouse abandoned the other when distributing property, although it may consider how that spouse’s conduct dissipated the value of a marital asset such as the marital home. Abandonment remains relevant to alimony under G.S. 50-16.3A(b)(1), which is decided separately from equitable distribution.

What happens if a spouse sells or destroys marital property after separation?

G.S. 50-20(c)(11a) puts acts of either party to waste, neglect, devalue or convert marital or divisible property after separation and before distribution among the factors the court weighs when it decides whether an equal division would be equitable, and evidence offered on the factor has to be considered and found on. Under Walter v. Walter, 149 N.C. App. 723 (2002), the conduct must have left the property unavailable for distribution or reduced its value below the date-of-separation figure. G.S. 50-20(i) separately allows a party to seek injunctive relief to prevent disappearance, waste or conversion while the claim is pending.

Is domestic violence considered in equitable distribution in North Carolina?

Not as fault. Hinton v. Hinton, 70 N.C. App. 665 (1984), held that evidence a husband had physically abused his wife was improperly considered in distributing property. Troutman v. Troutman, 193 N.C. App. 395 (2008), shows the boundary: the trial court could consider damage the husband’s criminal conduct did to the marital home, and stated that it was considering his actions against the property rather than against his wife.

Written for North Carolina law and reviewed by David P. Sheehan, attorney, Charlotte. General information, not legal advice — see the disclaimer.