Equitable Distribution Case Law Updates

Cheek v. Cheek, filed N.C. Court of Appeals, April 19, 2011 (No. 10-736).     Defendant appealed from the trial court’s equitable distribution order. First, Defendant argued that the trial court failed to classify properly the post-separation diminution in her retirement accounts as divisible property and apportion the loss between the parties. The court held that the lower court failed to make adequate findings of fact as to whether the change in the value of these accounts was due to her actions or to passive forces. Despite its decision to remand the issue for entry of findings of fact, the court stated that the trial court did not err in failing to classify the change in the value of the accounts as divisible because the Defendant’s actions in selling stocks, moving her money to a different account with a different firm and trading with the resulting funds were “managerial contributions” consistent with active depreciation.

Next, Defendant argued that Plaintiff’s retirement should have been distributed in-kind, based on the statutory presumption that an in-kind distribution is equitable. The court rejected this argument, noting that the in-kind presumption is subject to a preceding presumption, that an equal distribution is equitable. However, the court stopped short, failing to explain whether the trial court ever concluded that an unequal distribution was equitable. Defendant also argued that the court erred by failing to consider the tax ramifications of its order. The Court stated that because no evidence of tax consequences was presented, it would have been error for the court to consider such consequences in its order.

Finally, Defendant argued that the trial court failed to classify and distribute an insurance check and one of plaintiff’s checking accounts. The Court held that it found no abuse of discretion by the trial court in its failure to consider the value of the insurance check for damage to the house as distinct from the value of the home, but remanded to the trial court for findings of fact related to source of funds for Plaintiff’s checking account.

via Family Forum Case Updates.