How to Protect Gifts and Inheritances in a Divorce
Going through a divorce is an emotionally straining and frustrating experience that affects many aspects of your life. As you go through your married life, you accumulate assets together, like bank and retirement accounts, car titles, and mortgages. When the decision to end the marriage occurs, those assets must be divided.
In North Carolina, the legal term for division of property is called equitable distribution. Among the procedures for the various assets that need to be divided, the rules for gifts and inheritances can be some of the most confusing for people who are going through property division. In this article, we’ll explain how the court considers gifts and inheritances for the purpose of property division during a divorce.
Three Categories of Properties in Equitable Distribution
If you and your spouse end up in court for a judge to divide your assets, it’s safe to assume that both spouses couldn’t resolve the issue on their own or through mediation. This means it’s up to the court to determine who gets what by applying the laws for property division in North Carolina.
North Carolina is an equitable distribution state, meaning that the division of assets must be fair (or “equitable”) to both parties. This principle applies to all marital assets – no matter which spouse is listed as the legal owner. The court begins with the presumption that an equal, fifty-fifty division of any marital property is fair, but either spouse may attempt to argue for an unequal distribution — preferably with the help of an experienced family law attorney.
When thinking about assets, they need to be separated into three categories.
Marital property is any asset — including investments, mortgages, and pensions and other retirement benefits — that is earned or acquired beginning on the date of marriage and until the date of separation.
Separate property is any asset that was owned by a spouse prior to the marriage, or that was acquired during the marriage by inheritance or a specific gift to only that spouse. Separate property can’t be distributed to the other spouse by the court as long as the separate property wasn’t commingled with marital property.
The definition of divisible property is somewhat complicated. Generally speaking, divisible property includes changes in value that occur to marital property after the date of separation and which are not related to the active efforts of either spouse. It also includes property acquired after the date of separation that is due to a spouse’s work or effort that occurred prior to the separation.
If you want to maintain the separate nature of gifts and inheritances that you received during a marriage, then it’s very important to keep those assets truly separate by preserving them in different accounts and keeping thorough documentation of where the money or property came from, who it was intended for, what its intended purpose is, and whether there have been any changes in value to the asset.
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Preparing for Property Division: Important Questions
If an asset is identified by one of the parties as a gift or inheritance, the court must then determine if it meets the definition of separate property. If it does not, then the asset will be considered as marital property.
If the asset is deemed to be marital property, it will be divided along with the other assets and debts as part of equitable distribution. If the asset is deemed to be separate property, it will remain as the property of the spouse who received the asset and generally won’t considered at all by the court in equitable distribution. However, if the gift or inheritance has a high value in comparison to the marital estate, the court could use the asset as a reason to do an unequal division of the marital property.
It’s not easy to navigate the complicated landscape of separation, divorce, and property division. In general, one of the most important steps for success is to create as detailed a record as possible of all the assets that you and your spouse own separately and together, including all pertinent statements, records, and documentation.
Sometimes distinguishing the difference between separate property and marital property can be difficult and confusing. By working with an established family law attorney, you can be sure that you’re moving forward with a correct understanding of the law and a legal strategy that’s rooted in experience.
Get Experience on Your Side with Myers Law Firm
The attorneys at Myers Law Firm understand that the end of a marriage is one of the most difficult life events that a person can experience. That’s why we approach each family law case with empathy and compassion to look for practical resolutions that put our clients’ needs first. While we pride ourselves on our negotiation skills and will work to reach a viable compromise with the other side, we are also prepared to stand up in court and fight for your rights whenever your best interests call for it.
We have years of experience handling all major family law issues that surround the end of a marriage, including alimony, child custody, child support, property division, and divorce. If you need help with a family law matter in Mecklenburg County, call our offices at (888) 376-2889 or fill out our online contact form today to schedule an initial consultation.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.