Summary of North Carolina Separation, Divorce
and Alimony Law

Legal Separation in North Carolina

In North Carolina, couples legally separate when spouses begin living apart (in different residences) and at least one of them has the intent to remain separate and apart. Couples do not formally file for separation in North Carolina.

Separation and divorce are linked in North Carolina. One of the two grounds for no-fault divorce in North Carolina is separation for one year (the other is incurable insanity plus separation for three years).

Issues such as child custody, child support, property division, and alimony can be addressed by executing a Separation Agreement. It is best to work with an attorney in this situation. Certain formalities must be carefully followed in order for the agreement to be valid and binding.

Initial considerations for Divorce in North Carolina

To obtain a divorce in North Carolina, either spouse must live in the state for at least six months prior to filing the action for divorce.

Grounds for Divorce

“Grounds for divorce” are the legal reasons for a divorce. North Carolina permits an “irreconcilable differences” type of no fault divorce as well as fault divorces.

In addition, North Carolina law provides for something called a “divorce from bed and board.” This is the closest equivalent that North Carolina has to a legal separation. Although less common, a couple may request a divorce from bed and board in lieu of a divorce (however, unlike a typical divorce, both spouses must request a divorce from bed and board). The parties stay legally married, however a divorce from bed and board effectively accomplishes an economic divorce. Assets are distributed in a similar way to a divorce and the spouses obtain a judgment that, among other things, distributes assets and provides for alimony and support awards. A court will grant a bed and board divorce on the same grounds as a typical divorce. An attorney should be consulted to fully understand the legal implications of a bed and board divorce.

No-Fault:

To obtain a divorce on no fault grounds, is it required that the parties lives separately and apart for a period of one year.

Fault:

There are other grounds for obtaining a divorce on fault grounds, such as:

  • Abandonment
  • Divorce from bed and board
  • Maliciously turns the other out of doors
  • Cruelty and inhuman treatment
  • Excessive use of drugs and alcohol
  • Adultery
  • Incurable insanity
  • Offers such indignities that the other spouse’s life becomes intolerable or burdensome

Division of Property

North Carolina is an “equitable distribution” state. This means that all property owned by one or both of the spouses is considered to be in one of two categories: “marital property” and “separate property.”

“Separate property” acquired by a spouse before marriage or by way of inheritance or as a gift from a third party during the course of marriage, typically will be retained by the original owner of the property in a divorce. Property acquired in exchange for separate property shall remain separate property regardless of whether the title is in the name of the husband or wife or both and shall not be considered to be marital property unless a contrary intention is expressly stated in the conveyance.

That which is deemed to be “marital property” is subject to “equitable distribution.” That is, it is split between the spouses in a way that the court deems to be “equitable” (assuming the parties do not agree between themselves about how they wish to split up the marital property). Note that equitable does not necessarily mean equal or 50/50. Rather, it means that property will be split in a way that a court believes to be fair or just.

A court may consider the following factors (and others, as found in section 50-20(c) of the N.C. General Statutes) when deciding how to distribute marital property in an “equitable” way:

  1. The income, property, and liabilities of each party at the time the division of property is to become effective.
  2. Any obligation for support arising out of a prior marriage.
  3. The duration of the marriage and the age and physical and mental health of both parties.
  4. The need of a parent with custody of a child or children of the marriage to occupy or own the marital residence and to use or own its household effects.
  5. The expectation of pension, retirement, or other deferred compensation rights that are not marital property.
  6. Any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services, or lack thereof, as a spouse, parent, wage earner or homemaker.
  7. Any direct or indirect contribution made by one spouse to help educate or develop the career potential of the other spouse.
  8. Any direct contribution to an increase in value of separate property which occurs during the course of the marriage.
  9. Any other factor which the court finds to be just and proper.

Alimony in North Carolina

Alimony (also known as spousal support) is the court-ordered financial support of one spouse by the other spouse as part of a legal separation or divorce.

In North Carolina, alimony is not mandatory in a divorce or legal separation. A court may decide not to grant alimony or to limit the amount and duration of alimony depending on the ability of both parties to provide for their own needs.

Alimony is granted only where one spouse is substantially dependant on the other spouse or substantially in need of support, or where the payor spouse was at fault in the breakup of the marriage.

To be “substantially dependant,” a spouse must be actually dependant on the other in order to maintain the standard of living to which the spouses became accustomed in the last several years prior to the date of separation.

To be “substantially in need of support,” a recipient spouse would have to be unable to maintain the standard of living to which the spouses became accustomed without financial contribution from the other spouse.

Factors Affecting the Amount and Duration of Alimony

Alimony may be awarded for an indefinite amount of time or for a limited term. In determining the duration and amount of alimony, courts look at a variety of factors in North Carolina, including (but not limited to):

• 1. The marital misconduct of either of the spouses;
• 2. The relative earnings and earning capacities of the spouses;
• 3. The ages and the physical, mental, and emotional conditions of the spouses;
• 4. The amount and sources of earned and unearned income of both spouses, including, but not limited to, earnings, dividends, and benefits such as medical, retirement, insurance, social security, or others;
• 5. The duration of the marriage;
• 6. The contribution by one spouse to the education, training, or increased earning power of the other spouse;
• 7. The extent to which the earning power, expenses, or financial obligations of a spouse will be affected by reason of serving as the custodian of a minor child;
• 8. The standard of living of the spouses established during the marriage;
• 9. The relative education of the spouses and the time necessary to acquire sufficient education or training to enable the spouse seeking alimony to find employment to meet his or her reasonable economic needs;
• 10. The relative assets and liabilities of the spouses and the relative debt service requirements of the spouses, including legal obligations of support;
• 11. The property brought to the marriage by either spouse;
• 12. The contribution of a spouse as homemaker;
• 13. The relative needs of the spouses;
• 14. The federal, State, and local tax ramifications of the alimony award;
• 15. Any other factor relating to the economic circumstances of the parties that the court finds to be just and proper;
• 16. The fact that income received by either party was previously considered by the court in determining the value of a marital or divisible asset in an equitable distribution of the parties’ marital or divisible property.

Alimony also may be awarded during the period of separation and during the pendency of the divorce action. This is referred to as “post-separation support” in North Carolina.

Modifying Orders for Spousal Support

If alimony has been awarded for an indefinite period of time and not as a specific amount of money or in a lump sum, then a court may increase or decrease the amount of money paid as alimony.

To do so, one of the spouses must show a “substantial change in circumstances” from those that existed at the time of the original court order setting the amount of alimony. Examples of a “substantial change in circumstances” could include changes in earning capacity, expenses, income or assets of one of the former spouses.

When do Alimony Payments End?

In general, alimony that has been granted for an indefinite period of time terminates when either party dies or when the recipient spouse remarries. In some cases, alimony can end if the recipient spouse continuously cohabitates with another person and that other person provides some degree of support to the recipient spouses.

Tax Consequences of Alimony

It is important to understand that there may be tax implications for individuals who pay or receive alimony. According to Section 71 of the Internal Revenue Code, alimony must be included in the recipient’s gross income and can be excluded from the payer’s gross income.

However, it is critical that payments actually qualify as alimony under the law. To qualify as alimony (also according to Section 71 of the Internal Revenue Code), payments must generally meet five conditions:

• (1) The payment is be a cash payment (such as a check or money order)
• (2) The payment is received by (or on behalf of) a spouse under a “divorce or separation instrument”
• (3) The divorce or separation instrument does not designate the payment as a payment which is not includible in gross cross income as alimony and not allowable as a deduction for the payee spouse (under Section 215 of the Internal Revenue Code).
• (4) The payer and payee are not members of the same household at the time payments are made
• (5) There is no liability to make payments after the death of the recipient spouse

Sometimes it is difficult to determine whether a payment qualifies under the law as alimony. There also may be state and local tax implications for individuals who pay or receive alimony. Therefore, it is best to consult with an attorney or qualified tax professional.