Divorce and Investments

Investment accounts are one of many assets that can be classified as marital property and eligible for equitable distribution in North Carolina. Marital property is generally defined as any asset or debt acquired during a marriage that was not inherited or gifted. If you or your spouse has investment accounts that you contributed to during your marriage, those funds will likely be subject to division in a divorce.

Courts will not necessarily divide your investments 50/50. That’s because, in North Carolina, equal distribution is not required if a court determines that an even split would be inequitable. Courts consider numerous factors when deciding on equitable distribution, including:

• Income of each spouse
• Property and liabilities of the spouses
• Duration of marriage
• Health of both spouses
• Liquid and nonliquid status of property
• Pension and retirement rights
• Acts of either spouse to change the value of property during separation

Investment accounts can be volatile, as value fluctuations are inherent. However, when one spouse’s mismanagement of such an account leads to a diminished value after separation, this becomes a factor in determining equitable distribution in North Carolina.

In the case of Melson v. Crane, Husband’s mishandling of Wife’s Edward Jones investment account contributed to the court’s decision to award an uneven distribution of marital property.

Husband operated an Edward Jones investment office and was solely responsible for Wife’s account. After the divorce complaint was filed, the court entered temporary restraining orders prohibiting both parties and any agent of Edward Jones from removing or otherwise disposing of marital or divisible property. During the parties’ separation, Wife’s investment assets were significantly diminished by over $57,000. In addition, a margin account had been attached to her investment account without her knowledge.

The court ruled that an unequal division was just and equitable. Husband appealed the trial court’s decision to award an unequal distribution in favor of Wife, contending that the distribution should have favored him. The Court of Appeals upheld the lower court’s decision, in part due to Husband’s mismanagement of Wife’s investment account.

This case is a prime example of how investments and the handling of such accounts can impact a court’s ruling on equitable distribution in North Carolina. Before making any changes to your investment accounts or other assets, discuss how that may affect your pending or upcoming divorce. Our Greensboro divorce lawyers include family law specialists with experience handling divorces that involve complex property and asset considerations. Call us at 336.272.9122 to discuss your case and schedule a consultation.