In North Carolina, separate property refers to property that is owned by one spouse individually. Separate property includes: property (which can be an asset or debt) owned prior to the marriage, property acquired by gift or inheritance, or property acquired in exchange for other separate property. However, gifts between spouses are presumed to be marital property unless there is evidence that the property was intended to be the separate property of the recipient spouse.
A spouse’s separate property is not subject to equitable distribution. A judge does not have authority to divide a spouse’s separate property, or include its value as part of the marital and divisible estate. When there is a disagreement between the spouses as to whether property is the separate property of one spouse, the spouse claiming the property is his or her separate property has the burden of proving that:
- the property was owned prior to marriage;
- the property was received by gift or inheritance;
- the property was a gift from the other spouse during the marriage and there was an intention stated in the conveyance that it would be the separate property of the recipient spouse; or
- the property was acquired in exchange for separate property.
Therefore, if you claim that property is your separate property, the burden is on you to present sufficient evidence to convince a judge that the property falls into one of the four categories referenced above.
Tracing separate property, such as an investment account, to its origin can be a difficult and challenging process, especially during a lengthy marriage when documents may have been lost or destroyed over the years. In some situations it may be necessary to retain a forensic accountant to help you trace your separate property to its origin before marriage or the time it was gifted or inherited. A judge may be persuaded by oral testimony, but reliable documentation or other physical evidence will be most persuasive, especially if you and your spouse are offering contradictory testimony. If a spouse is unable to produce sufficient evidence that property is his/her separate property, then a judge may find that the property is marital property and include it in the valuation and distribution of the marital estate.
Attorney Daphne Edwards represents clients in a wide array of family related matters, including equitable distribution. Her expansive knowledge and experience has earned her a solid reputation representing clients in equitable distribution matters, including those seeking to defend or challenge claims of separate property.