Personal Property and Equitable Distribution in North Carolina

“It’s not fair,” the client says. “It’s the law,” responds the attorney.  There are certain truisms when it comes to personal property and the equitable distribution  process in North Carolina:

  • Judges do not like to spend court time valuing and dividing up personal property like furniture, garden tools, decorations, and clothing.
  • Lawyers, even though they are paid to help you work out the issues, don’t like spending their time or your money arguing over personal property like furniture, garden tools, decoration, and clothing.
  • For purposes of court action and settlement, the price paid for an item of personal property is not usually the value at which it will be assigned.

Every lawyer I know has a story about a fight over personal property spinning out of control.  One story I like to recount is a fight I heard about over a particularly common and inexpensive set of  stainless steel flatware that the couple had been using for the fifteen years of their marriage.  This used flatware is the kind of thing you might find for $10.00 at a yard sale on any Saturday morning.     The parties and their lawyers argued about if for a couple of hours at a mediation.   The combined cost to the parties including their attorneys’ fees and mediator costs was close to $1,000.

The lesson is simple, if you are involved in a fight over personal property try to find a way to resolve it.

 

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Scott Allen is a divorce attorney in Raleigh, NC with over eighteen years of experience in all areas of family law litigation and settlement.

Retirement Division in Divorce

QRDO Retirement DivisionHow are retirement benefits divided in your divorce?

The most valuable assets of most marriages are the home and retirement benefits.   North Carolina’s equitable distribution law allows the court to divide these (and other) assets if they are marital property.

Unlike financial assets such as savings, money market and checking accounts, it is unwise (or even impossible in some circumstances) to simply withdraw money from a retirement account like a 401(k) or IRA to transfer to the other spouse.    The reasons that withdrawing funds from these accounts is unwise is because of the severe tax consequences to certain kinds of withdrawals form these kinds of accounts.  A special kind of document is required in most circumstances to allow the division, and this is called a QRDO.

Qualified Domestic Relations Orders (QRDOs) are court orders with specialized language that are applied to retirement plans subject to the Employment Retirement Income Security Act (ERISA).  There are other non-ERISA retirement plans that are also frequently divided in divorce.  These include state, federal and military retirement and pensions.

Keep in mind that there are two basic types of retirement assets: defined benefit plans and defined contribution plans.     The type of plan has an impact on how it is valued for purposes of figuring out what a reasonable distribution of property

Defined Contribution Plan (DCP):

A 401(k) is a defined contribution plan.  Generally speaking, the value of a DCP is the account statement balance on any given date.  For example, if someone wants to know the value of  a Fidelity 401(k), simply collect the account statement on the date that is of interest.  Usually this date is the date of separation of the parties.

Defined Benefit Plan (DBP):

A company pension is an example of a defined benefit plan.   The DBP is characterized by statements showing what a person’s retirement would be if they retire on a certain date in the future and the statement usually shows this as a monthly amount.   This kind of retirement plan is more difficult to value than the 401(k).   To obtain a present value, a math process has to be performed where the goal is to calculate the present value of the future stream of retirement benefits.  With any prediction such as this, the value will change based on the variables used.  The variables in this kind of present value calculation are life expectancy of the plan participant and the discount rate.

Conclusion:

The QDRO is a complex document because not only must it be a proper court order, it must comply with the ERISA requirements.

How to get assistance with a QDRO in your case?  There are several choices.  Your lawyer can help you with it.  You can also get information from the retirement plan administrator.

 

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Raleigh divorce lawyer Scott Allen handles equitable distribution, retirement division, and other related matters.

If you have questions or need assistance call him at (919) 863-4183 or email at sallen@allenspence.com.  

Guardians and the Family Law Case

In Raleigh, NC where I have practiced law most of the last seventeen-plus years there have been a few rare occurrences in my cases.  More rare than lunar eclipses in fact.  I am referring to the appointment of guardians in family law cases.

Under the NC Rules of Civil procedure a guardian may be appointed for a party or a child.  A guardian in this capacity is called a “guardian ad litem” and frequently referred to as a GAL.

Guardians are appointed for a party in a divorce case when that spouse is not mentally or physically capable of handling the matters related to the litigation.  For example, if a spouse suffers from schizophrenia or other serious psychological condition where their decision-making process is impaired, a guardian can be appointed.

It’s the guardian’s job to look out for the party’s legal interests and assist the attorney in prosecuting or defending the case. GAL’S for adults in domestic cases often have a very hard job.  They have to balance the duty to the party for whom he or she is guardian and listen to their stated wants and desires while using their best judgment about how to proceed forward in the divorce case.

It’s also a tricky situation for the attorney who thinks his or her client may need a guardian.  Frequently, however, there is a mental health professional who is making it clear that the client shouldn’t be or can’t make decisions for himself or herself.

Guardians for children have a similar role.  In family law cases, they are frequently appointed in cases where there are allegations of parental abuse or neglect that involve child protective services.  Children’s guardians are somewhat rare in Wake County in the “normal” child custody case where two parents simply disagree over scheduling and decision-making issues.

The guardian for a child in a case has the ability to report to the court how the child doing and be a voice for the child’s interest in the court process.  I have seen instances where the  GAL takes the witness stand and reports on how the child is doing in school, in therapy, and what the GAL wants for the custodial arrangement for the child.

Of course, whatever the GAL says in court, the final decision in a custody case is for the judge to make.  However, judges frequently give great weight to the statement of the guardian.

 

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Raleigh lawyer Scott Allen has litigated  cases involving guardians in custody, equitable distribution and alimony

If you have questions or need assistance call him at (919) 863-4183.  

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Financial Mediation in Wake County – The Basics

Wake County has a family court system and local rules that are designed to streamline the court process.  Financial mediation is a requirement in Wake County family law cases where equitable distribution, postseparation support, and alimony are at issue.

Family financial mediation is presided over by a mediator.  A mediator is a neutral person who is there to assist the parties in reaching a settlement of their disputes.

Prior to the mediation, the mediator will have each party sign a mediation agreement that sets out the details of the mediation and how the mediator’s fee will be paid. The mediator’s fee is usually divided equally between the parties and is due at the end of the mediation.

The mediator may not be called as a witness in the case and is boung by rules of strict confidentiality.  Also, offers made back and forth at mediation cannot be used against a party in court.  For example, let’s say you agreed to accept $100,000 to settle equitable distribution at the mediation.  If it does not settle, the other party can’t go into court and say that you agreed to accept that amount.

Generally, the parties are in separate rooms with their lawyers.   The mediator will go back and forth throughout the day carrying offers and counteroffers between the parties.

If the mediation is successful, the parties usually sign a settlement document at the end of the mediation.  The reason a document is signed at mediation is to insure that a deal has been reached and people won’t change their minds later on.

Mediation is a way for the parties to settle their conflict outside of a courtroom.  It can save money and time.  Mediation is also less emotionally taxing than going to court.

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Raleigh lawyer Scott Allen is a mediator and also represents clients in equitable distribution, postseparation support, and alimony cases.

If you have questions or need assistance call him at (919) 863-4183 or email at sallen@allenspence.com.  


Jury Trial in North Carolina Family Law Cases

Most family law cases in North Carolina are heard in district court by a district court judge sitting without a jury.   When a judge hears a case without a jury, the judge decides both how to apply the law to the case and what the facts of the case are.

Although not a typical family law case, claims for alienation of affections and criminal conversation may be heard by a jury if either party makes a timely demand.  In alienation of affections and criminal conversation the jury decides both liability for the claims and the money  damages to award (or not award) to the plaintiff.

Either party in an alimony case has the right to request a jury trial; however, North Carolina law limits the jury’s involvement to the determination of marital misconduct or fault.  A jury in an alimony case cannot set the amount or duration of the alimony award.

A jury trial is absolutely not available in child custody or child support cases or in equitable distribution of property cases; however, one may be demanded in an absolute divorce divorce from bed and board and annulment actions.

Family law attorney Scott Allen has litigated cases before judges and juries and has over seventeen years of experience.  If you have questions or need assistance call him at (919) 863-4183 or email at sallen@allenspence.com.