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How are financial matters handled during divorce?

On Behalf of | Aug 21, 2023 | Divorce

Divorce is an emotionally taxing process that compels most couples to grapple with numerous complicated financial matters. In North Carolina, the division of assets and debts is subject to a legal standard known as “equitable distribution” in the event that a couple can’t reach mutually-agreeable settlement terms without judicial intervention. This involves a detailed analysis of the couple’s financial situation, including identifying, classifying, valuing and distributing marital assets and liabilities.

One of the central components of the equitable distribution process in North Carolina is the distinction between marital and separate property. Marital property consists of virtually all assets and debts acquired during the marriage, while separate property generally includes assets owned before the marriage or acquired by inheritance or gift.

Exploring financial accounts and how they are divided

Financial accounts, such as checking, savings and investment accounts, are generally considered marital property if acquired or comingled during a couple’s marriage. Division of these accounts in North Carolina may require a careful analysis of each account’s history, including contributions, withdrawals and appreciation.

Retirement accounts and their complexity in divorce

Retirement accounts like 401(k)s, IRAs and pensions can be some of the most valuable assets in a marriage and are often subject to division during a divorce. In North Carolina, the portion of the retirement accounts earned during the marriage is considered marital property unless a valid prenup or postnup says otherwise. The division of these accounts can be complex, often requiring a qualified domestic relations order (QDRO) to ensure that the funds are divided without incurring penalties or additional taxes.

Alimony in North Carolina and its financial implications

Alimony, or spousal support, is a financial obligation that one spouse may have to pay the other after a divorce to maintain a standard of living comparable to that during the marriage. In North Carolina, there is no set formula for calculating alimony. Factors such as the length of the marriage, each spouse’s needs and earning capacities play a role in determining alimony in a contentious divorce. In an uncontested divorce, the parties can choose to set up a spousal support arrangement in whatever way they deem appropriate.

All financial decisions that you make during a divorce can impact your future. Ensuring that you’re making choices that will benefit you is important. Seeking legal guidance accordingly can help to ensure that your interests remain protected as your situation evolves.