What Factors will a Judge Consider in Dividing Property?

When a court makes a distribution of assets pursuant to an equitable distribution claim, property is divided so there is an equal division of the marital property. However, if a judge determines that an in kind, equal distribution is not equitable, a judge may then divide marital property equitably.

There is a strong presumption that an equal distribution is equitable and an equal distribution between both parties is mandatory unless a judge makes findings of facts, while considering all the statutory factors, that an equal distribution would be inequitable.

The following are the factors that a court must consider:

1. The income of either party, the property of either party, and liabilities of each party at the time the division of the property will become effective.2. Any prior obligation for support that either party must pay to a prior spouse arising from a prior marriage.3. The mental health of both parties, both parties age and physical wellbeing, and the duration of the marriage.4. A custodial parents with children from the current marriage needs to own the marital residence and to remain in use of the marital residence and its household goods.5. Whether or not either party expects to receive a pension, retirement, or deferred compensation that are not part of the current marital property.6. An equitable claim of any type or a direct or indirect interest or contribution made to acquire marital property by a party who does not possess title. This includes efforts that are made jointly as well as expenditures and services and lack of contribution and/or services as spouse, earner of income or an individual whom acts as a homemaker.7. A contribution by either spouse, whether it be direct or indirect to help educate or develop the career of another spouse.8. An increase in the value of separate property due to a direct contribution during the coarse of the marriage.9. Whether or not marital property is liquid.10. If there is difficulty in valuing an asset or an interest in a corporation, profession and or business entity and the desire of either party to retain that interest in a manner that is free and clear from interference of the other party.11. Tax Consequences to either party.12. If either party has preserved, maintained, expanded, developed, wasted, neglected, converted, or devalued marital property after the date of separation and prior to the final distribution of all assets.13. If one party dies prior to the distribution of assets.14. A well founded factor that a court deems just and proper.

The factors only come into play once someone asks for an unequal division

In North Carolina the distributional factors in G.S. 50-20(c) are not a scoring system applied to every case. There are fourteen of them — subdivisions (1) through (12), together with (11a) and (11b) — and they exist to answer a single question. The subsection requires “an equal division by using net value of marital property and net value of divisible property unless the court determines that an equal division is not equitable,” and the factors are the material on which that determination is made and on which any unequal division is then built.

The burden belongs to the party who wants more than half. Under White v. White, 312 N.C. 770, 324 S.E.2d 829 (1985), that spouse must produce evidence on one or more of the statutory factors and must prove by a preponderance of the evidence that an equal division would not be equitable. Meeting that burden does not compel an unequal award — in Lund v. Lund, 779 S.E.2d 175 (N.C. Ct. App. 2015), the Court of Appeals confirmed that a trial court may still order an equal division after hearing evidence on several factors.

Every factor supported by evidence has to be addressed in the findings

A North Carolina trial court must consider the distributional factors raised by the evidence and make findings on each of them. Where evidence relating to a particular factor is introduced, the court must consider it and make an appropriate finding of fact; in Warren v. Warren, 175 N.C. App. 509, 623 S.E.2d 800 (2006), evidence was offered on the liquidity factor, the postseparation conduct factor and the catch-all, no findings were made, and the case was remanded.

The requirement is not confined to unequal divisions. G.S. 50-20(j) directs that in any distribution order the court “shall make written findings of fact that support the determination that the marital property and divisible property has been equitably divided,” and Armstrong v. Armstrong, 322 N.C. 396, 368 S.E.2d 595 (1988), read that plain language as covering orders that divide the estate equally.

The conclusion itself must be phrased in the statute’s terms. Lucas v. Lucas, 209 N.C. App. 492, 706 S.E.2d 270 (2011), holds that it is not sufficient to conclude that an unequal distribution is equitable; the judgment must conclude that an equal division is not equitable, so that the appellate court can see the presumption was given its weight.

Factor 11a is about what happened to the property after separation

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 as part of deciding 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 is the factor that most often decides real cases, because the period between separation and trial is where the estate moves.

It rewards preservation as readily as it penalizes waste. Postseparation payment of the mortgage and routine upkeep of the marital residence was properly considered in Peltzer v. Peltzer, 222 N.C. App. 784, 732 S.E.2d 357 (2012), and acts to preserve the parties’ down payment on a property under contract at separation were considered in Brackney v. Brackney, 199 N.C. App. 375, 682 S.E.2d 401 (2009).

There has to be a measurable effect on the estate. Walter v. Walter, 149 N.C. App. 723, 561 S.E.2d 571 (2002), holds that marital property is wasted, neglected, devalued or converted only if at the time of distribution it is unavailable for distribution or has decreased in value from its date-of-separation value as a result of the spouse’s acts.

Factor 12 is narrower than it looks

G.S. 50-20(c)(12) allows the court to consider “any other factor which the court finds to be just and proper,” but North Carolina appellate courts have read it against the economic character of the rest of the subsection. It cannot be used to bring in a matter another provision of G.S. 50-20 excludes: in Wiencek-Adams v. Adams, 331 N.C. 688, 417 S.E.2d 449 (1992), a trial court properly refused to weigh a wife’s waiver of child support, because G.S. 50-20(f) requires distribution to be made without regard to child support.

It cannot be used to import marital fault either. Smith v. Smith, 314 N.C. 80, 331 S.E.2d 682 (1985), confines the catch-all to conduct with economic consequences, and Fountain v. Fountain, 148 N.C. App. 329, 559 S.E.2d 25 (2002), applies that limit directly.

Speculative advantages are also excluded. In Petty v. Petty, 199 N.C. App. 192, 680 S.E.2d 894 (2009), the trial court erred in treating a husband’s expected inheritance under his living father’s will as a distributional factor, the expectancy being too speculative. And a non-custodial spouse’s wish to keep the marital residence is not a proper factor, because it does not relate to the economic condition of the marriage: Burnett v. Burnett, 122 N.C. App. 712, 471 S.E.2d 649 (1996).

Support obligations sit outside the calculation

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 after the distribution is determined to consider, on request, whether an existing alimony or child support order should be modified or vacated under G.S. 50-16.9 or G.S. 50-13.7.

That exclusion covers payments already made. In Miller v. Miller, 778 S.E.2d 451 (N.C. Ct. App. 2015), the Court of Appeals said it would have been error to consider postseparation support payments in the equitable distribution order, though the trial court was entitled to credit a husband for sums he paid in excess of his postseparation support obligation.

One statutory factor does look at support, but only historically: G.S. 50-20(c)(2) covers “any obligation for support arising out of a prior marriage,” not the support claims between the parties in front of the court.

Evidence on the factors has to be built before trial

Because the court can only weigh what is in front of it, the factors are effectively decided by the pretrial record. The inventory affidavits required by G.S. 50-21(a) fix each party’s classification and valuation contentions on paper, and the scheduling and discovery conference required within 120 days by G.S. 50-21(d) is where discovery limits, expert appointments and an application to determine the date of separation are dealt with.

A judgment that fails to address contentions raised in the pretrial order will not stand. Hinkle v. Hinkle, 227 N.C. App. 252, 742 S.E.2d 325 (2013), remanded an order providing for an equal distribution where the pretrial order raised contentions for an unequal division, evidence was presented on the related factors, and the order contained no findings about them.

Common questions

How many factors can a North Carolina judge take into account in dividing marital property?

G.S. 50-20(c) sets out fourteen factors — subdivisions (1) through (12), together with (11a) and (11b). They are not weighed as a matter of course in every case: they are what the court considers once it is deciding whether an equal division would be inequitable, and findings are required on each factor on which evidence was offered. Under G.S. 50-20(j) the order must contain written findings supporting the determination that the estate has been equitably divided, even where the division is equal.

Who has to prove that an unequal division of property is fair in North Carolina?

The spouse asking for it. White v. White, 312 N.C. 770 (1985), places on that party both the burden of producing evidence on one or more of the factors in G.S. 50-20(c) and the burden of proving by a preponderance of the evidence that an equal division would not be equitable. Lund v. Lund, 779 S.E.2d 175 (N.C. Ct. App. 2015), confirms that a trial court may still order an equal division after hearing that evidence.

Can a judge consider who paid the mortgage after separation?

Yes. G.S. 50-20(c)(11a) covers acts of either party to maintain, preserve, develop or expand the marital or divisible property after separation and before distribution. In Peltzer v. Peltzer, 222 N.C. App. 784 (2012), a husband’s postseparation mortgage payments and routine maintenance of the marital residence were properly considered, the court noting that he had also had the benefit of living there.

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