In Wenninger v. Wenninger, decided May 7, 2024, the North Carolina Court of Appeals held that an equitable distribution judgment was void for lack of a necessary party because the parties in the equitable distribution proceeding stipulated in a pre-trial order that certain items of property were held in a revocable Trust and further stipulated that some of the property held by the Trust was marital property. The court of appeals held that the Trust was a necessary party, even though the trial court refused to distribute the items in the Trust because they were not owned by either party.
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Tag: equitable distribution
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Equitable Distribution: Stipulation in a Pretrial Order Makes Revocable Trust a Necessary Party
The North Carolina Court of Appeals recently voided an entire equitable distribution judgment because the trial court denied a motion to add as a party a revokable trust alleged to be a necessary party, even though the motion was made more than three months after the conclusion of the equitable distribution trial. In Wenninger v. Wenninger, decided May 7, 2024, the appellate court held that the equitable distribution judgment was void for lack of a necessary party because the parties in the equitable distribution proceeding stipulated that items of property titled in the name of the trust were marital property, even though the trial court refused to distribute the items because they were not owned by either party.
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Equitable Distribution: QDROs, DROs, and a statute of limitations
In this earlier post, I wrote about whether the 10-year statute of limitations for initiating an action on a judgment bars the entry of a QDRO if the request for the QDRO is made more than 10 years following entry of the equitable distribution judgment. https://civil.sog.unc.edu/so-someone-forgot-to-draft-that-qdro-now-what/
The court of appeals recently answered this question, holding that the entry of a QDRO, or a DRO as discussed further below, is a procedural method of effectuating and completing a judgment rather than a substantive mechanism for enforcement of a judgment. Therefore, a request for the court to enter the order is not an action on a judgment and is not barred by the statute of limitations.
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Equitable Distribution: Classification of Student Loans as Marital Debt
Marital debt is debt incurred during the marriage by either or both spouses for the joint benefit of the parties. Huguelet v. Huguelet, 113 N.C. App. 533 (1994). The party asking that the debt be classified as marital has the burden of proving the value of the debt on the date of separation and that the debt was incurred during the marriage for the joint benefit of the parties. Miller v. Miller, 97 N.C. App. 77 (1990).
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Equitable distribution: Classification of Life Insurance Policies and Proceeds
In Crago v. Crago, 268 NC App 154 (2019), the court of appeal rejected a request to apply the analytic approach to classify life insurance proceeds received by wife before the date of separation. The analytic approach is the classification approach adopted by the appellate court to classify personal injury settlement proceeds, see Johnson v. Johnson, 317 NC 437 (1986), and workers compensation payments, see Freeman v. Freeman, 107 NC App 644 (1992). The analytic approach classifies the proceeds according to what the payments were intended to compensate. So, to the extent a personal injury settlement replaces economic loss to the marriage, it is marital. To the extent it compensates a spouse for future lost wages or personal pain and suffering, it is separate.
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Equitable Distribution: significant legislative amendments regarding retirement accounts and other forms of deferred compensation
North Carolina S.L. 2019-172 (H 469) made substantial revisions to GS 50-20.1 governing the classification, valuation and distribution of pension, retirement and deferred compensation benefits. The changes apply to distributions made on or after October 1, 2019.
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Equitable Distribution: Classification of a Lawyer’s Contingency Fee
In the recent case of Green v. Green, (N.C. App., Oct. 3, 2017), the court of appeals held that a fee received by a lawyer as the result of the resolution of a case his firm took on a contingency basis before the lawyer separated from his wife was not marital or divisible property. The court based this decision on the fact that the lawyer did not receive the fee until after the date of separation and did not have a right to receive the fee on the date of separation because the agreement provided that no fee would be received if there was no recovery in the case. The appellate court reversed the trial court decision that a portion of the fee was ‘deferred compensation’ for work the husband performed before the date of separation. The trial court had classified this portion of the fee as divisible property pursuant to GS 50-20(b)(4)(b) which provides that divisible property includes property received “as the result of the efforts of either spouse during the marriage and before the date of separation.”
This decision by the court of appeals is significant because it is the first time the court of appeals actually reviewed a decision by a trial court interpreting this particular category of divisible property and because the holding of the appellate court seems to say this category is much more limited than the language of the statute indicates. Continue Reading
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Equitable Distribution: The Marital Property Presumption
Immediately following the definition of marital property in G.S. 50-20(b)(1), the statute states “[i]t is presumed that all property acquired after the date of marriage and before the date of separation is marital property except property which is separate property under subdivision (2) of this subsection.” This presumption probably is the most important core principle of classification of property in North Carolina equitable distribution because it defines the burdens of proof. Continue Reading
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So someone forgot to draft that QDRO. Now what?
An equitable distribution judgment was entered 11 years ago. The order states plaintiff is entitled to a percentage of defendant’s retirement pay when defendant begins to receive it. The judgment also states that plaintiff’s counsel will draft a QDRO. Now it is time for defendant to retire but no one ever drafted a QDRO. Is there a problem? Can the court enter one now?
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Equitable Distribution: Post-Separation Changes in Debt
Almost every equitable distribution case involves marital debt. And because there often is a significant amount of time between the date of separation – the point in time when the marital estate is created and valued – and the date the marital estate actually is distributed, most every case also involves post-separation changes in the amount owed on that marital debt. The amount either increases because neither party pays the bills and interest and finance charges accrue, or the amount decreases because one of the parties make payments. North Carolina law has struggled to determine the best way to address these changes in the distribution process.