What is the Equitable Distribution process in North Carolina?

Equitable Distribution is a three step process conducted by the court when spouses are unable to divide property on their own.


The first step in the process is “identification”. The court must determine which property is marital and which is separate. Separate property is property owned before marriage, inherited property and gifts. Separate property used to purchase jointly held real estate becomes marital property. Most of the remaining property is designated as marital property. Property that is acquired during marriage by one or both spouses, and owned on the date of separation, may be defined as marital property subject to the equitable distribution law of North Carolina.

Excluded, however, from the definition of marital property are gifts and inheritances, received by one spouse only, from third parties, whether such property is acquired during the marriage or not. Such gifts and inheritances are that spouse’s separate property and do not get divided with the other spouse. Gifts from one spouse to the other spouse during the marriage, on the other hand, are presumed to be gifts to the marital unit.

Property owned by either party prior to marriage is that party’s separate property, provided that it is not gifted to the marital unit.


The second step is “valuation”. This is the assignment of a fair market value to each piece of marital property. Frequently, appraisers and other experts assist in this step of the process. The fair market value is the amount that would be paid by a willing buyer to a willing seller.



The final step is “distribution”. The court must distribute the marital property in an equitable manner. An equal division of the marital property is mandatory under the Equitable Distribution Act, unless the court determines in the exercise of its discretion that such a distribution would be inequitable. A distribution is not subject to reversal on appeal unless the court abused its sound discretion.