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: Necessary parties
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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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Is a parent always a ‘necessary party’ to a custody action?
Consider a custody action brought by a grandparent against the mother of a child. Grandmother is seeking primary custody, arguing that mother is unfit and has waived her constitutional right to exclusive care, custody, and control of her child. Grandmother does not name the father of the child as a defendant and makes no attempt to serve him with process. The complaint states that neither the grandmother nor the mother know the location of the father, and the father has never been involved in the life of the child. Can the court move forward on grandmother’s claim without the father named as a party?
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Equitable Distribution: When Marital Property is Not Owned by a Party……
In the recent case of Nicks v. Nicks, 774 SE2d 365 (NC App 2015), husband transferred property acquired during the marriage to an LLC and the LLC thereafter was transferred to a trust. All of this occurred before the date of separation. Understandably, the trial judge in the equitable distribution action filed after the parties separated felt that the property transferred to the LLC should be classified as marital property and distributed between the spouses, so the trial court classified the LLC itself as marital property and distributed it the husband as his share of the marital estate. The court of appeals vacated the ED judgment and remanded the case to the trial court after concluding the LLC was not marital property because it was not owned by either or both spouses on the date of separation.
Does this mean a spouse can avoid ED simply by transferring ownership of property to an LLC or other third party before the date of separation, or by allowing family members or others to hold legal title to property acquired with marital funds during the marriage?