Domestic Relations – Arbitration – Equitable Distribution – Passive Increase in Value – Life Insurance – Retirement Accounts – Mortgage Reduction

Kiell v. Kiell (Lawyers Weekly No. 12-16-0763, 14 pp.) (Robert C. Hunter, J.) Appealed from Catawba County District Court. (C. Thomas Edwards, J.) N.C. App. Unpub. Full-text opinion.

Holding: The record shows that the increase in the value of two life insurance policies was approximately twice the amount of the premiums paid during the post-separation period. Policy statements from the insurer clarify that approximately half the increase in the policies’ values during this period was from interest and dividends. The arbitrator erred in finding that there was no passive post-separation appreciation in the value of the life insurance policies.

We reverse the calculation of the divisible value of the policies and remand for a correction. Otherwise, we affirm the trial court’s confirmation of the arbitrator’s judgment of equitable distribution.

The arbitrator did not err by distributing to the wife the entire marital portion of three retirement accounts. Where the wife concedes that (1) the husband’s interest in his business is difficult to distribute and (2) it is economically desirable to keep the husband’s business intact, it doesn’t matter that (3) there were other assets subject to equitable distribution. G.S. § 50-20.1(e) requires a party to prove only one of these three factors before an award of retirement benefits may exceed 50 percent of the benefits the person against whom the award is made is entitled to receive.

Since the wife presented no evidence that she would be required to sell or liquidate her distribution from a Wachovia Securities account, the arbitrator was not required to consider the tax consequences of such a sale or liquidation.

The wife challenges the arbitrator’s grant to the husband of a dollar-for-dollar credit against the marital estate for the amount by which his payments reduced the principal balance of the mortgage on the marital home. While the home was distributed to the husband, the wife lived in the home payment-free for at least five years prior to the distribution. This is a factor the arbitrator could properly consider in calculating the distribution.

Distribution of the home to the husband and the wife’s post-separation use of it would seem to balance each other out, leaving the husband’s payment of the mortgage principal as the remaining factor for which he may reasonably be given a credit. Further, the parties stipulated that the marital home would be distributed to the husband prior to the entry of the equitable distribution order, thus restricting the arbitrator’s flexibility in making his distribution.

The wife does not cite any authority for her contention that a credit for mortgage payments for the purpose of calculating equitable distribution is not allowed when the payments are also considered to be spousal support for the purpose of calculating alimony. The arbitrator did not err in awarding the husband a credit against the marital estate for the reduction of principal on the marital home.

Affirmed in part, reversed in part, and remanded.