Can Separate Property be Divided in a Collaborative Divorce?

Many spouses in North Carolina take solace in the fact that certain property is virtually untouchable during a divorce. Under normal circumstances, this property remains in their possession, regardless of the equitable distribution process. Many would agree that this system is fair, and it gives spouses a greater degree of financial protection when ending their divorce. These “untouchable” assets are called “separate property.” But what happens if you and your spouse choose a collaborative divorce? In this situation, the normal rules do not apply. So can separate property be divided in this scenario?

If you have any questions about how collaborative divorce works in North Carolina, it is probably a good idea to get in touch with a divorce attorney. Ideally, you should choose an attorney who has experience with collaborative divorce. Our legal professionals can answer all of your questions about the collaborative divorce process, including matters related to property division. Once you are confident about this process, we can guide you forward.

Separate property includes all assets that a spouse accumulated before the marriage papers were signed. It also includes all assets accumulated after the date of separation. In other words, these are assets that a spouse obtained outside of the marriage. The most important thing to remember about the separate property is that it is not subject to the equitable distribution process. This means that spouses get to keep 100% ownership of their separate assets after the divorce is finalized. 

There are a few exceptions to this rule. First of all, inheritance is considered separate property even if it was received by a spouse during the marriage. If a spouse then takes their inheritance and uses it to purchase 100% of another asset, such as stocks or real estate, that property is also considered separate. In addition, gifts are considered separate property even if they were received during the marriage, and the same general logic applies. 

When spouses choose collaborative divorce, they approach the end of their marriage in a different way compared to a “normal” trial-based divorce. Most of the collaborative divorce process occurs behind closed doors, and spouses do not go through a lengthy trial. Instead, they seek to work out their differences through negotiation. The end goal is to create a separation agreement, which is essentially a written contract that the spouses both sign. Every possible area of contention surrounding the divorce is resolved in this written contract. These areas include child custody, child support, spousal support, and of course, property division.

The most important thing to remember about collaborative divorce is that the normal rules do not apply. You and your spouse are free to handle the property division process in any way you see fit. Therefore, you do not need to think in terms of “separate” and “marital” property if you do not want to. Spouses could potentially agree to divide their separate property in certain situations. In other cases, they might agree that certain marital property should be left entirely in the possession of one spouse. 

Keep in mind that both spouses must agree on how these matters are handled. Both spouses must be willing to sign the separation agreement, and if one party feels that they are being left with no property whatsoever, they simply will not sign the agreement. While you are under no obligation to follow the trial-based system of marital and separate property, there is always the underlying threat of a trial if the negotiation process breaks down. Because of this, spouses can successfully fight to keep separate assets in collaborative divorce, even though these rules technically do not apply. 

If you have been searching the North Carolina area for a divorce attorney, look no further than Arnold & Smith, PLLC. We have considerable experience with collaborative law, and we understand that property division will be a primary concern for many divorcing spouses in the Tar Heel State. With our help, you can protect your financial well-being after the divorce is finalized. The collaborative divorce process gives you much more freedom and flexibility compared to a trial-based divorce, and it may provide you with a greater range of options. Book your consultation today, and we can get started on an action plan immediately.