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Family law attorneys Sarah Hink and Elizabeth Stevenson of New Direction Family Law discuss North Carolina equitable distribution in divorce, emphasizing that most marital property and debt acquired from the date of marriage to the date of separation is typically divided 50/50, regardless of whose name it’s in, with values generally set as of separation. They explain separate property carve-outs (inheritances kept separate, premarital retirement/house interests) and when debts may be treated as separate (not benefiting the marriage). They warn against trying to manipulate accounts or incurring debt right before separation, and note most cases settle in required mediation if parties avoid “nickel-and-diming” personal property. They also highlight practical issues with houses, refinancing, credit risk, and the need to address property claims before an absolute divorce, which can waive equitable distribution rights.
00:00 Mediation Pitfalls
00:35 Meet the Attorneys
00:57 Equitable Distribution Basics
02:01 Marital Property Freeze Frame
02:33 Unequal Splits and Misconduct
03:44 Separate Property Exceptions
05:02 Messy Assets and Businesses
05:44 DIY Agreements and Prenups
06:41 Pets and Personal Property
07:17 Mediation and Nickel Dime Fights
09:39 Home Values and Letting Go
11:32 Debt Division and Credit Risks
14:06 Bankruptcy and Final Warnings
Creators and Guests
What is Ex-it Strategy?
Your no bullsh$t guide to divorce with experienced attorneys from New Direction Family Law and guests and professionals who have been there. Unfiltered discussions to help you move from victim to victorious and from bitter to better.
81 - Exit Strategy - Equitable Distribution
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Sarah J. Hink: [00:00:00] I think what sends. Cases the wrong direction of mediation. It lists, when it comes to equitable distribution is people trying to nickel dime everything.
Elizabeth A. Stephenson, MSW: I agree.
Sarah J. Hink: And what she spent five years ago,
Elizabeth A. Stephenson, MSW: I agree.
Sarah J. Hink: Or my mother gave us a loan for a thousand dollars back in 1998.
Likeer, no. Like get over it.
Hello. I'm Sarah Hink from New Direction Family Law, and I'm here with Elizabeth Stevenson.
Elizabeth A. Stephenson, MSW: I'm Sarah's partner at New Direction Family Law, and we are here to talk about all things about divorce, separation, kids, money, finances, all the fun stuff that goes along with separating a divorce.
Sarah J. Hink: Yeah, someone on the. More boring aspects, but also very important. Mm-hmm. Is the division of property, which in [00:01:00] North Carolina we refer to as equitable distribution.
Elizabeth A. Stephenson, MSW: Correct.
Sarah J. Hink: Equitable, not equal, but.
Elizabeth A. Stephenson, MSW: Equitable. Equitable.
Sarah J. Hink: What's
Elizabeth A. Stephenson, MSW: fair and what's right and what's reasonable.
Sarah J. Hink: But most attorneys will tell you that, um, in most cases, you're gonna divide it equally.
50 50. 50 50.
Elizabeth A. Stephenson, MSW: I agree.
Sarah J. Hink: So you're back to the, the equal anyways. But there are some factors that can swing one way or the other. Um, but in general, what are we talking about in, in the property sense?
Elizabeth A. Stephenson, MSW: I think that the easiest way to explain it is, and people, it's hard to wrap, some people to wrap their head around this, is that whatever was earned.
Or whatever was, um, acquired as debt during the marriage. From the date of marriage to the date of separation is at first considered marital. So even if you are the one that went out and earned the million dollars that you have in your 401k. Your other part, your part, your wife or husband is gonna be at the top entitled to half of that Correct.
As a starting point. Mm-hmm. So it doesn't matter whose name it's in, it matters when it, when you acquired it, whether it's a bank account, a retirement account, a [00:02:00] car, doesn't matter.
Sarah J. Hink: Yeah. So I think about too, like the data separation is the date that we. Value everything.
Elizabeth A. Stephenson, MSW: Correct.
Sarah J. Hink: So you kind of do a, a, a, a freeze frame on what you had, right?
Right. Like what did you have in the bank account? What was your house worth? You know, what kind of cars did you have? What kind of debt did you have?
Elizabeth A. Stephenson, MSW: Right.
Sarah J. Hink: And that's really the most simple way to think about it. And as long as all that was acquired during the marriage, just to make it easy. So you got married young and then.
Everything you have at the end of the day was marital, and we're gonna divide all that up
Elizabeth A. Stephenson, MSW: and we're just gonna divide it in half more than likely. I mean, that's, that's the, that's the court starting point. They can certainly look at, you know, some factors for an unequal distribution. Did you stay at home?
Did you let the other partner go and, you know, make a career? All of that. But it really, I don't, I don't know how much that matters so much anymore. No. At that point,
Sarah J. Hink: I've seen court orders maybe swing at 5%
Elizabeth A. Stephenson, MSW: percent, but it's not gonna be 90. Five to five by any means,
Sarah J. Hink: marital misconduct doesn't matter
Elizabeth A. Stephenson, MSW: matter unless you were spend thrift or you're spending money on your paramore or your girlfriend or [00:03:00] whatever.
Yeah. And that's still a small factor. Yeah. That would be factored in there.
Sarah J. Hink: Right?
Elizabeth A. Stephenson, MSW: Um, sometimes here our, um, there we have done a podcast about, um, bad mistakes that you make during divorce and one of them I think is whoever, 'cause we value it, the data separation do not. You can go take money out the day before the date of separation and, and think that it's not gonna be counted as, 'cause it wasn't there on the date of separation.
Yeah.
Sarah J. Hink: That's not how it
Elizabeth A. Stephenson, MSW: works. It's not how it works. So, I mean, you can do it, but you're, you're gonna have to owe half of it back at some point. More than
Sarah J. Hink: likely. Yeah. Or have people go and get a new car and finance a new car right before date of separation and then try to stick the other person with that liability.
And it's kinda like, no, we can see through that and know, understand exactly what happened.
Elizabeth A. Stephenson, MSW: Right. So, um, so what was acquired during the marriages? Starting point, marital property, but it can be, you can get separate property. You can get property that would not be entitled to the other party to have a portion of, and that'd be what we call separate property.
Which would be what?
Sarah J. Hink: Well, if it's during the marriage, it's probably inheritance, right? You kept it in a separate account.
Elizabeth A. Stephenson, MSW: Right.
Sarah J. Hink: [00:04:00] Um, if it's something that you had before the marriage, so if you been working at the same job for 25 years and have a retirement account. And you've been married for the last five years of it, then we're gonna have to, you know, back out the premarital Right.
Contributions and growth on that. Right. To figure out what the marital part is.
Elizabeth A. Stephenson, MSW: Right. Same thing with a house. You may have owned a house, you guys moved into it. You refinance, put everybody on the mortgage where the person who owned it is gonna get credit. You're gonna value it at the date of separation, you're gonna get some credit for that.
So it won't be, so that's an instance where it wouldn't be 50 50 per se.
Sarah J. Hink: Yeah.
Elizabeth A. Stephenson, MSW: In that respect,
Sarah J. Hink: separate property carve out.
Elizabeth A. Stephenson, MSW: Right. Same debt. Like if you have, um, education debt and stuff, you know, you had before, even if I've seen this before, where you would acquire, God acquired a hundred, almost $500,000 in education debt.
But it didn't benefit the marriage. Mm-hmm. Because they got it so late and never got a job with it. It's just what they wanted to do. I mean, the judge went, no, ma'am.
Sarah J. Hink: Yeah.
Elizabeth A. Stephenson, MSW: You know, I'm not putting that on this. You, you're, you're taking all that [00:05:00] debt
Sarah J. Hink: Right.
Elizabeth A. Stephenson, MSW: In, in that respect. So,
Sarah J. Hink: yeah. And there's a lot of case law on these caveats about certain debts and property, um, that, that can get a little messy, like the ownership of a house before marriage.
But say you bought it like. 30 days before you got married, then lived in it together for 15 years. Right. And everyone contributed to the mortgage. Right? Well, there's gonna be a part of that. That's gonna be marital.
Elizabeth A. Stephenson, MSW: Right. And a large, a large part of it's gonna be marital. If you only had it for that short
Sarah J. Hink: period, it's a little messy.
And then businesses,
Elizabeth A. Stephenson, MSW: oh yeah.
Sarah J. Hink: When business is acquired, right. How much money's in the business,
Elizabeth A. Stephenson, MSW: what percentage of your partnership is the business? Yeah. All of that. So it's really helpful if you'll. Especially if you have a large, even if you don't have a large estate, but if you have a business, you own a home, you have retirement, you need, it's helpful to have attorneys, um mm-hmm.
To help you. I mean, I've had a case, um, that the folks 20 some years ago did a separation agreement. Hold it off the internet.
Sarah J. Hink: Mm-hmm.
Elizabeth A. Stephenson, MSW: And, and we've been in litigation over it for forever because it, there are [00:06:00] things in there that are just so messed up.
Sarah J. Hink: Yeah.
Elizabeth A. Stephenson, MSW: So if you'll spend a little money on the front end, you can save a lot of money on the back end.
Sarah J. Hink: Right. I had a, a couple of those last year too. I mean, people just think they're smarter than everyone.
Elizabeth A. Stephenson, MSW: Well, I think they just don't want, like, oh, we don't need an attorney. We don't have a lot. But I mean, it's really, it can be a lot, you know?
Sarah J. Hink: Yeah.
Elizabeth A. Stephenson, MSW: Especially if it's alimony and property and businesses and
Sarah J. Hink: all that.
Y see cases where people do have a lot and they still don't hire an attorney. I'm like, what were you thinking? And they think they're gonna pull a fast one on the other spouse.
Elizabeth A. Stephenson, MSW: Right?
Sarah J. Hink: And they do. And the other spouse signs. And you gotta figure out, okay, well how do we get you out of this? Terrible contract that you've agreed to.
Right,
Elizabeth A. Stephenson, MSW: right. And another podcast. But maybe a prenup would be helpful or a postnup, but either
Sarah J. Hink: way Yeah, for sure.
Elizabeth A. Stephenson, MSW: Yeah.
Sarah J. Hink: Yeah. So that's, that's generally what equitable distribution is, right? Is just valuing the debt and the property assets during marriage, including houses. You know, bank accounts,
Elizabeth A. Stephenson, MSW: personal property, like what's in the house, some, you know,
Sarah J. Hink: Bitcoins.
Elizabeth A. Stephenson, MSW: Yeah. Guns, whatever.
Sarah J. Hink: Yeah,
Elizabeth A. Stephenson, MSW: all of that. Dogs, cats.
Sarah J. Hink: Yeah. What [00:07:00] are they worth? They aren't custody, that's for sure.
Elizabeth A. Stephenson, MSW: They're they're personal property? They're
Sarah J. Hink: property.
Elizabeth A. Stephenson, MSW: They are property,
Sarah J. Hink: yeah. Mine are all rescues, so I guess they aren't gonna be worth,
Elizabeth A. Stephenson, MSW: can't put a dollar on that, but
Sarah J. Hink: Yeah. But some people do. They do.
Some people do. Show up with their kennel papers or dog fight over that.
[00:08:00] if you do file a claim and start a lawsuit for property division. In North Carolina, you're required to go to, um, mediation with a private mediator, which always my 99.9% of cases for the most part will settle in mediation for If you could get people to mediation, I think you can likely get the case settled and not have to go to court.
Sarah J. Hink: Yeah, I think that's a little on the high side. Well, and your percentage, but
Elizabeth A. Stephenson, MSW: Well, maybe it, maybe, maybe I'm really good at mediation. I don't know. But anything you can do to avoid, um. Going to court and, and not getting, you know, screwed per se. Right. Um, and be able to compromise and come to an agreement that both of you feel comfortable with, that everybody has to give up something and leave equally unhappy.
Yeah. That's a good outcome for folks
Sarah J. Hink: and I think what sends. Cases [00:09:00] the wrong direction of mediation. It lists, when it comes to equitable distribution is people trying to nickel dime everything.
Elizabeth A. Stephenson, MSW: I agree.
Sarah J. Hink: And what she spent five years ago,
Elizabeth A. Stephenson, MSW: I agree.
Sarah J. Hink: Or my mother gave us a loan for a thousand dollars back in 1998.
Likeer, no. Like get over it.
Elizabeth A. Stephenson, MSW: Or I put the whole, you may have put 10, 15, $20,000 down on the down payment. And we appreciate that. Mm-hmm. But you know, you're not gonna get that back dollar for dollar.
Sarah J. Hink: That's, that's when mediation goes downhill.
Elizabeth A. Stephenson, MSW: Well,
Sarah J. Hink: and it's not like a judge is gonna wanna hear all that either.
Elizabeth A. Stephenson, MSW: No. The judge wants to know what was the value when the date you separated, what's, whose name was it in? Um, and who want, who am I gonna distribute it to? Mm-hmm.
Sarah J. Hink: And
Elizabeth A. Stephenson, MSW: they're
Sarah J. Hink: not gonna concerned with little nickel and dimes. I've had cases where. They appoint a referee to decide between personal property, like your tangible assets in your house, your who gets the rice cooker.
Like, yeah,
Elizabeth A. Stephenson, MSW: don't do that.
Sarah J. Hink: Judges don't wanna deal with that. They'll literally point a third party to go to your house and be like, okay, you get that. You get that,
Elizabeth A. Stephenson, MSW: and they're gonna put a yard sale value on it. You know, people with [00:10:00] bedroom suits, so they bought 20 years ago, $5,000. It's like, no. No, maybe 50 or I don't wanna
Sarah J. Hink: hear about, I don't wanna hear anything about it.
Elizabeth A. Stephenson, MSW: Most my cases I don't, no personal property unless it's like, you know, nice antiques, Oriental rugs or whatever. That's different. Yeah. But for the most part, no.
Sarah J. Hink: If you can go out and get an appraisal on it that shows it's for substantial money, then I'll, I'll hear it out.
Elizabeth A. Stephenson, MSW: Right. And distinct. I, some do like comic.
I've had one comic books or whatever, like first edition. Edition that was like, okay, well yeah, go get it, but you gotta go get it valued.
Sarah J. Hink: Yeah.
Elizabeth A. Stephenson, MSW: And if you wanna spend the money to do that, that's great.
Sarah J. Hink: That's on you. You might have to get your, your house valued. And you know, especially now, things have changed in the housing market,
Elizabeth A. Stephenson, MSW: right?
Sarah J. Hink: So they're not gonna be worth as much as you thought they were. Right. Or they were a couple years ago.
Elizabeth A. Stephenson, MSW: Right.
Sarah J. Hink: Get an appraisal. But even those, I think right now it's kind of hard because there's not a clear number that people are putting in houses. Like they're moving slower. So like, what is the house worth now?
It's kind of an unknown.
Elizabeth A. Stephenson, MSW: Well you get an appraisal, but you don't know.
Sarah J. Hink: Yeah.
Elizabeth A. Stephenson, MSW: So the easiest part, a lot of times people just. You know, well, let's just [00:11:00] sell it and then it, whatever it sells for what it's worth. And then you just divide it up.
Sarah J. Hink: That's right. You're gonna have to sell your under 3%
Elizabeth A. Stephenson, MSW: finance mortgage.
It just
Sarah J. Hink: really sucks.
Elizabeth A. Stephenson, MSW: Well, that's the other issue about property is, you know, especially if you have kids or you've lived there, a lot of people want, they, they're emotionally attached to their house. Mm-hmm. And, and it's really hard to help them come to understanding that. You may not be able to afford to live there.
You know, right? That yes, you may be able to refinance and then you're gonna have to pay out the $50,000 you owe to the other party. And so you're adding that to your mortgage at 6% instead of two. And so you are not gonna be able to afford that mortgage payment.
Sarah J. Hink: Yeah. Your monthly amount changes. Not that like going out there and renting is much cheaper these
Elizabeth A. Stephenson, MSW: days.
Well, I know. You know, it's always also, um, sell it. You go buy something else and you can start fresh. Mm-hmm. I mean, you know, and leave all every memories perhaps bad memories too. Yeah. And you get a new fresh start and start all over again.
Sarah J. Hink: Not enough sage sometimes to. Agreed. Get all those demons from the, the house [00:12:00] you had e and memories and all of
Elizabeth A. Stephenson, MSW: that.
Agree. Agree. Yeah. But sometimes you just gotta let it go and it's, it's not gonna work out the way you think it is.
Sarah J. Hink: Yeah. You know? Yeah, I understand. Wanting to stay there for the kids. I do too. You know, they're gonna, they're already getting a new home. So then they'd get two new homes for everyone's moving.
Elizabeth A. Stephenson, MSW: The kids are so good, are resilient.
Sarah J. Hink: Make it fun for them.
Elizabeth A. Stephenson, MSW: Yeah, you do. Let's go pick out, do furniture. Come on, we'll paint your bedroom. All of that.
Sarah J. Hink: Yeah.
Elizabeth A. Stephenson, MSW: So they're always good around it for
Sarah J. Hink: sure. Oh yeah. So another topic on equitable distribution is like that debt, and that's a hard thing for people to deal with too.
I've had cases where we literally just fight over debt.
Elizabeth A. Stephenson, MSW: Sometimes it's worth fighting ever. Mm-hmm. Especially, you know, you, you find debt that you didn't know was out there.
Sarah J. Hink: Yeah.
Elizabeth A. Stephenson, MSW: Really doesn't matter. Yeah. You know, if it was acquired during the marriage, it's gonna be a marital debt
Sarah J. Hink: unless it was debt all spent on like hookers and cocaine
Elizabeth A. Stephenson, MSW: or something like that.
Yeah. But, you know, but if it's your gap card and, and your sax card and your husband didn't know about it, or your wife didn't know about it, too bad. I'm sorry. It doesn't
Sarah J. Hink: matter.
Elizabeth A. Stephenson, MSW: You know, you didn't look, you didn't take the opportunity to see or ask. So it's on you.
Default_2026-03-31_2: You
Sarah J. Hink: can, you buy cocaine with [00:13:00] gap
Elizabeth A. Stephenson, MSW: cards,
Sarah J. Hink: so you know you're safe there.
Um, but that's really the only thing where you're gonna say, okay, well that debt's your separate debt is when it's spent for something. Clearly not for the benefit of the
Elizabeth A. Stephenson, MSW: marriage. Better marriage. Correct.
Sarah J. Hink: Although the,
Elizabeth A. Stephenson, MSW: but that's, you know, what it's at, you know,
Default_2026-03-31_2: but
Sarah J. Hink: you know, the right rules is actually, it's, you're supposed to assume that.
Credit card debt in a person's separate name is separate. You have to show that it's for the benefit of marriage, which is really easy, but it's just the presumption at first. Right. Is like that. It wasn't Right. It's very easy to show.
Elizabeth A. Stephenson, MSW: Yes, I agree.
Sarah J. Hink: Buying your own clothes is for the benefit of the marriage.
Elizabeth A. Stephenson, MSW: It's a marriage. Yeah. Especially if you're working or buying it, clothes for the kids or whatever that might be,
Sarah J. Hink: but it's tough when someone spends a lot on the credit card and you want nothing to do with it. Maybe you're, you know, more financially savvy. That's what caused the end of the marriage. I've seen plenty of people that separate due to financial stress.
Elizabeth A. Stephenson, MSW: I agree.
Sarah J. Hink: Um, but you're still gonna have to cover half of that. I
Elizabeth A. Stephenson, MSW: agree.
Sarah J. Hink: Unless you can negotiate otherwise.
Elizabeth A. Stephenson, MSW: Right. And, and part of going with debt is what happens, you know, a lot of times we'll say you can stay in the [00:14:00] house and they're gonna pay the mortgage. What happens if they don't pay the mortgage and you're on the mortgage?
Well then that's gonna ding your credit and you really don't want that to happen. You know? Yeah. So you gotta sort of counsel people to say, we can do this, but if he doesn't pay, you're gonna have to pay and we need to figure out how you're gonna do that.
Sarah J. Hink: Yeah. So that's why we wanna separate all those ties.
That's right. And get you off the, the mortgage. Right. Um, car payments, you know, a lot of cars are underwater quickly.
Elizabeth A. Stephenson, MSW: Right. Get your name. And even insurance, it's like you wanna get off the insurance. 'cause if they get in a wreck. They're gonna come after you, you're gonna be liable too. So, yeah. You know
Sarah J. Hink: medical bills?
Elizabeth A. Stephenson, MSW: Yes. Oh, absolutely. Medical bills.
Sarah J. Hink: Yep.
Elizabeth A. Stephenson, MSW: So without something signed like a separation agreement, um, you're still on the hook for it. If, if they can't pay, they're gonna come looking for you.
Sarah J. Hink: Yep.
Elizabeth A. Stephenson, MSW: For sure.
Sarah J. Hink: That's just a huge thing to think about.
Elizabeth A. Stephenson, MSW: Right.
Sarah J. Hink: And hopefully you have assets to divide and not all debt, but I, I mean, I've seen people just spend, I've seen debt, a ton of money on attorneys just fighting over, over
Elizabeth A. Stephenson, MSW: debt.
Sarah J. Hink: Just debt.
Elizabeth A. Stephenson, MSW: You know, at the end of the day, I don't know,
Sarah J. Hink: and people [00:15:00] file for bankruptcy, which is a whole other topic. We'll have to do an episode on bankruptcy and how it affects yeah.
Default_2026-03-31_2: We'll,
Sarah J. Hink: not today, we'll get a bankruptcy attorney in.
Elizabeth A. Stephenson, MSW: Yes, we will do that.
Sarah J. Hink: Although I did, I did, I did well in bankruptcy class in law school.
Did you? But I left it there.
Elizabeth A. Stephenson, MSW: I've had a couple of cases where the opposing party did. Bankruptcy, which infuriates, you know, your client because now they're, they don't have to pay all that debt. But you're still on for your half of it. But
Sarah J. Hink: yeah.
Elizabeth A. Stephenson, MSW: You know.
Sarah J. Hink: Yeah. We'll do an episode
Elizabeth A. Stephenson, MSW: on that. Yeah, we will.
That's a good idea.
Sarah J. Hink: But just know that it's important to have a separation agreement, deal with property before you go through the absolute divorce. 'cause that does release your claim for equitable distribution. Absolutely. And through the court system. So if you have a house together, if you have. Debt together in the same name.
Make sure that you talk to an attorney. Make sure you deal with that property before that year and a day comes up and you file for divorce,
Elizabeth A. Stephenson, MSW: correct? Absolutely.
Sarah J. Hink: Yeah.
Elizabeth A. Stephenson, MSW: Cool.
Sarah J. Hink: As always. Ain't that some
Elizabeth A. Stephenson, MSW: shit? Shit. Do.