Separate and Marital Property

#1

We are in the process of separation and I have a few questions on separate and marital property. I owned my home before the marriage. I am assuming that is separate property and if I sell my home, do I have to share the proceeds with my husband?
I also have a 401K account that was started before the marriage and I continued to contribute (not him) from my employer. Is that considered marital property?
We have kept all our financials separate during the course of the marriage. He is not even listed as a beneficiary on my 401k. I was pretty much the breadwinner and he only contributed to half the cost of the monthly mortgage and half the utilities. I essentially financed everything else down to the grocery bills. I even surrendered the first 2 years of our joint tax return because he owed back taxes from his previous marriage (which I did not know about until after I filed the return). I put the down payment on the car he is driving. There are circumstances similar to these that have occurred during the course of our marriage. Would these be situations where I need an attorney for, or is it something I can state during my divorce proceedings? Thank you.

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#2

Generally anything acquired during the marriage (except inheritances) is marital property subject to being divided in equitable distribution.

You have a lot of dual classification assets (marital property and separate property) that could get tricky in dividing.

The house is likely a dual classification property. It is your separate property because you acquired it during the marriage but it is also marital property to the extent that his income helped pay the mortgage and/or make any improvements. So, he would be entitled to one-half of the principal reduction of the mortgage during the marriage (from date of marriage to date of separation).

Your 401(k) is also likely a dual classification property. The funds you contributed prior to the date of marriage plus any passive gains on those funds is your separate property. The funds you contributed during the marriage (from date of marriage to date of separation) plus any passive gains on those funds are marital property subject to being divided in equitable distribution because these contributions were marital funds (funds earned during the marriage).


Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.

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#3

Thank you for your response. I’m still a bit confused as my house was acquired before the marriage. So I get it’s separate property but you’re saying his income contributed to help pay the mortgage which makes it dual classification?

So to understand what you wrote:

“He would be entitled to one-half of the principal reduction of the mortgage during the marriage (from date of marriage to date of separation).”

Does this mean only calculate the principal that was reduced not including the interest? Is that taken from an amortization schedule?

Would there be any special circumstances to consider such as that tax lien that was taken from his past marriage out of our tax returns for 2 years in a row? Or the fact that I paid for everything else to manage the house? He did not contribute to any improvements.

If in the case he agrees to letting me keep all proceeds from the sale of my house in a separation agreement would the judge override that?

Thank you!

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#4

For the house, the marital value would be one-half of the principal reduction during the marriage as opposed to the fair market value (which would be the case if the home were purchased during the marriage).

For example, if the principal-only portion of your mortgage payments were $1,000/month (you do not include interest or escrow payments), and you were married for 1 year (to make the math simple), then the marital value of the home would be $12,000, to which he would be entitled to a $6,000 portion.

You can simply look at mortgage statements to determine the principal-only portion of each payment. If you have a fixed interest rate mortgage, this amount is likely the same each year.

You can include in a balance sheet the marital funds that went to pay his separate debt since these were not voluntarily paid towards his separate debt.

It won’t matter who paid for what during the marriage in regards to household expenses. These were funds earned during the marriage and spent for marital purposes.

A judge will not override a separation agreement if both parties execute the separation agreement without duress, undue influence, unconscionability, etc.


Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.

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#5

Hi Anna,
Something new has evolved since the last question. My spouse is now checking to see if he can buy my home (the separate property I brought into the marriage). If he does qualify and purchases my home, could he tie the proceeds up in our separation period? He hasn’t signed the separation agreement yet and is trying to buy the house. I will sell it to him no problem, but didn’t know if there would be complications with the closing and the proceeds. I am still willing to give him the half paid down principal that I wrote into the separation agreement. I may have to retain you after all!

Thank you,
Lani

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#6

He can buy your separate property home but he should be treated as any other buyer. Any other buyer would not be able to tie up the sale proceeds, so neither can he. Since you don’t have a separation agreement in place and you’re not yet divorced, it may be easier to negotiate the entire equitable distribution settlement with your separate property house being conveyed to him and how much he should pay you, but you will want to be very careful that the final distribution is still equal or equitable.

It would be best to have the separation agreement in place before this happens.


Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.

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#7

Thank you very much! How can I set up a consultation with you?

Lani

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#8

Please call our office at (919) 787-6668 and ask to schedule a consultation. You will talk with one of our client liaisons who will help you with scheduling.


Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.

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#9

Hi Anna,
My spouse has been approved to purchase my home now. Other than making sure there is a separation agreement in place before any mortgage papers are signed, is there anything else I need to be aware of? He informs me the closing date is April 16.
Thank you,
Lani

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#10

Hi Anna,
My spouse has not been approved to buy my house after all. He has verbally stated what he wants in the separation agreement, much of which I would not agree to. At this point, I do not feel safe being in the same home and wanted to know options of how I can get him out. We may not get to a separation agreement but what is my right in getting him out of the home being the home is my separate property? He hasn’t physically been abusive, but has made verbal statements that is making me nervous. He paid his portion of the bills for March, but hasn’t paid anything for April yet.

Thank you.

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#11

If there cannot be an agreement as to when he will move out, then you may need to file an action for divorce from bed and board if fault grounds apply. A domestic violence protective order can also order him out of the home if there has indeed been an act of domestic violence by him.

Oftentimes a stern threat or letter from a lawyer can be enough to set in motion one spouse moving out of the marital residence.


Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.

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#12

Thank you. Welcome back! I ended up retaining your firm and look forward to working with you and Shaunis.

Lani

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