Automatic Ord/Equitable Distribution Claim.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 2
HOUSE BILL 866
Committee Substitute Favorable 4/29/25

Short Title: Automatic Ord/Equitable Distribution Claim. (Public)
Sponsors:
Referred to:
April 10, 2025
*H866-v-2*
A BILL TO BE ENTITLED 1
AN ACT TO REQUIRE AU TOMATIC ENTRY OF AN ORDER PROHIBITING SP OUSES 2
FROM WASTING, CONVERTING, OR SECRETING ASSETS UPON FILING A CLAIM 3
FOR EQUITABLE DISTRIBUTION. 4
The General Assembly of North Carolina enacts: 5
SECTION 1.1. Article 1 of Chapter 50 of the General Statutes is amended by adding 6
a new section to read: 7
"§ 50-23. Automatic order for equitable distribution claims. 8
(a) As used in this Article, "automatic order" is the standing order entered by the court to 9
prevent the waste, dissipation, or secreting of assets or increasing debt or other liabilities and 10
which is entered at the time an equitable distribution claim is filed in an action. The court must 11
enter the form order created by the Administrative Office of the Courts for the automatic order. 12
(b) The automatic order must contain the following provisions: 13
(1) Neither party shall sell, transfer, encumber, conceal, assign, remove, 14
withdraw, or in any way dispose of, without the consent of the other party in 15
writing, or by order of the court, any property, including real estate, personal 16
property, cash, accounts, stocks, mutual funds, bank accounts, loyalty points 17
or miles, cars, and boats whether individually or jointly titled, except in the 18
usual course of business, for customary and usual household expenses, or for 19
reasonable attorneys ' fees in connection with a ny claim filed under this 20
Chapter. 21
(2) Neither party shall sell, transfer, encumber, assign, remove, withdraw, or in 22
any way dispose of any tax-deferred funds, stocks, or other assets held in any 23
individual retirement accounts, 401K accounts, profit sharing plans, Keogh 24
accounts, or any other pension or retirement account, and the parties shall 25
further refrain from applying for or requesting the p ayment of retirement 26
benefits or annuity payments of any kind, without the consent of the other 27
party in writing, or upon further order of the court; except that any party who 28
is already in pay status may continue to receive such payments thereunder. 29
(3) Neither party shall sell, transfer, encumber, assign, remove, withdraw, or in 30
any way dispose of any property owned by or for the benefit of the children , 31
including any 529 plan accounts, real estate, personal property, cash, accounts, 32
stocks, mutual funds, bank accounts, loyalty points or miles, and cars whether 33
individually or jointly titled, except for customary and usual expenses 34
historically paid for the benefit of the children from those assets without the 35
consent of the other party in writing or by order of the court. 36
General Assembly Of North Carolina Session 2025
Page 2 House Bill 866-Second Edition
(4) Neither party shall incur unreasonable debts hereafter, including further 1
borrowing against any credit line secured by the family residence, further 2
encumbering any assets, or unreasonably using credit cards or cash advances 3
against credit cards, except in the usual course of business or for customary 4
and usual household expenses, or for reasonable attorneys' fees in connection 5
with any claim filed under this Chapter. 6
(5) Neither party shall remove the other party as beneficiary, co-owner, cosigner, 7
or authorized user of any account in subdivisions (1) through (4) of this 8
subsection nor shall they add a nonparty to any account as a beneficiary, 9
co-owner, cosigner, or authorized user of any account in subdivisions (1) 10
through (4) of this subsection without the consent of the other party in writing, 11
or by order of the court. 12
(6) Neither party shall cause the other party or the children to be removed from 13
any existing medical, hospital, and dental insurance coverage, without the 14
consent of the other party in writing, or by order of the court. Each party shall 15
maintain the existing medical, hospital, and dental insurance coverage in full 16
force and effect until the parties agree in writing or the court orders otherwise. 17
(7) Neither party sha ll change the beneficiaries of any existing life insurance 18
policy without the consent of the other party in writing, or by order of the 19
court. Each party shall maintain the existing life insurance, automobile 20
insurance, homeowner 's insurance, and renter 's insurance in full force and 21
effect until the parties agree in writing or the court orders otherwise. 22
(8) This order is entered without prejudice to either party. 23
(c) The plaintiff shall serve the automatic order with the summons and complaint when 24
there is a newly filed equitable distribution claim as required by Rule 4 of the North Carolina 25
Rules of Civil Procedure . If the equitable distribution claim is filed in an existing action, the 26
automatic order shall be served in a manner provided for in Rule 5 of the North Carolina Rules 27
of Civil Procedure for service and return of process. 28
(d) The automatic order shall be immediately binding upon the party who filed the initial 29
equitable distribution claim and upon the other party once served with the automatic order. 30
(e) The automatic order shall remain in full force and effect until a final order is entered 31
regarding the equitable distribution claim, unless terminated, modified, or amended by the court 32
upon motion of either party or upon entry of a consent order by the parties. 33
(f) Entry of th e automatic order shall not replace, limit, or restrict other remedies or 34
protections available to the parties, including filing a lis pendens or obtaining an injunction under 35
Rule 65 of the North Carolina Rules of Civil Procedure." 36
SECTION 1.2. The Administrative Office of the Courts shall develop a form order 37
for the automatic order which must contain the following information: 38
(1) The case caption. 39
(2) A finding of fact that a claim for equitable distribution claim has been filed in 40
the action. 41
(3) A decretal section containing the required provisions listed in G.S. 50-23(b), 42
as enacted by this act. 43
The Admin istrative Office of the Courts shall have this form order finalized and 44
available on its website for use by October 1, 2025. 45
SECTION 1.3. Section 1.1 of this act becomes effective October 1, 2025, and applies 46
to actions or claims filed on or after that date. 47
SECTION 2.1. G.S. 50-20(c) reads as rewritten: 48
"(c) There shall be an equal division by using net value of marital property and net value 49
of divisible property unless the court determines that an equal division is not equitable. If the 50
court determines that an equal division is not equitable, the court shall divide the marital property 51
General Assembly Of North Carolina Session 2025
House Bill 866-Second Edition Page 3
and divisible property equitably. The court shall consider all of the following factors under this 1
subsection: 2
(1) The income, property, and liabilities of each party at the time the division of 3
property is to become effective. 4
(2) Any obligation for support arising out of a prior marriage. 5
(3) The duration of the marriage and the age and physical and mental health of 6
both parties. 7
(4) The need of a parent with custody of a child or children of the marriage to 8
occupy or own the marital residence and to use or own its household effects. 9
(5) The expectation of pension, retirement, or other deferred compensation rights 10
that are not marital property. 11
(6) Any equitable claim to, interest in, or direct or indirect contribution made to 12
the acquisition of such marital property by the party not having title, including 13
joint efforts or expenditures and contributions and services, or lack thereof, as 14
a spouse, parent, wage earner or homemaker. 15
(7) Any direct or indirect contribution made by one spouse to help educate or 16
develop the career potential of the other spouse. 17
(8) Any direct contribution to an increase in value of separate property which 18
occurs during the course of the marriage. 19
(9) The liquid or nonliquid character of all marital property and divisible property. 20
(10) The difficulty of evaluating any component asset or any interest in a business, 21
corporation or profession, and the economic desirability of retaining such 22
asset or interest, intact and free from any claim or interference by the other 23
party. 24
(11) The tax consequences to each party, including those f ederal and State tax 25
consequences that would have been incurred if the marital and divisible 26
property had been sold or liquidated on the date of valuation. The trial court 27
may, however, in its discretion, consider whether or when such tax 28
consequences are reasonably likely to occur in determining the equitable value 29
deemed appropriate for this factor. 30
(11a) Acts of either party to maintain, preserve, develop, or expand; or to waste, 31
neglect, devalue or convert the marital property or divisible property, or both, 32
during the period after separation of the parties and before the time of 33
distribution. 34
(11b) In the event of the death of either party prior to the entry of any order for the 35
distribution of property made pursuant to this subsection: 36
a. Property passing to the surviving spouse by will or through intestacy 37
due to the death of a spouse. 38
b. Property held as tenants by the entirety or as joint tenants with rights 39
of survivorship passing to the surviving spouse due to the death of a 40
spouse. 41
c. Property pas sing to the surviving spouse from life insurance, 42
individual retirement accounts, pension or profit -sharing plans, any 43
private or governmental retirement plan or annuity of which the 44
decedent controlled the designation of beneficiary (excluding any 45
benefits under the federal social security system), or any other 46
retirement accounts or contracts, due to the death of a spouse. 47
d. The surviving spouse's right to claim an "elective share" pursuant to 48
G.S. 30-3.1 through G.S. 30-33, unless otherwise waived. 49
(11c) Whether a party was held in contempt of court for violation of the automatic 50
order entered pursuant to G.S. 50-23. 51
General Assembly Of North Carolina Session 2025
Page 4 House Bill 866-Second Edition
(12) Any other factor which the court finds to be just and proper." 1
SECTION 2.2. Section 2.1 of this act becomes effective October 1, 2025, and applies 2
to actions or claims filed on or after that date. 3
SECTION 3.1. G.S. 50-21 reads as rewritten: 4
"§ 50 -21. Procedures in actions for equitable distribution of property; sanctions for 5
purposeful and prejudicial delay. 6
(a) At any time after a husband and wife begin to live separate and apart from each other, 7
a claim for equitable distribution may be filed and adjudicated, either as a separate civil action, 8
or together with any other action brought pursuant to Chapter 50 of the General Statutes, or as a 9
motion in the cause as provided by G.S. 50-11(e) or (f). Upon filing the initial claim for equitable 10
distribution as provided for in this section, the automatic order shall be entered and served as 11
provided for in G.S. 50-23. Within 90 days after service of a claim for equitable distribution, the 12
party who first asserts the claim shall prepare and serve upon the opposing party an equitable 13
distribution inventory affidavit listing all proper ty claimed by the party to be marital property 14
and all property claimed by the party to be separate property, and the estimated date-of-separation 15
fair market value of each item of marital and separate property. Within 30 days after service of 16
the inventory affidavit, the party upon whom service is made shall prepare and serve an inventory 17
affidavit upon the other party. The inventory affidavits prepared and served pursuant to this 18
subsection shall be subject to amendment and shall not be binding at trial a s to completeness or 19
value. The court may extend the time limits in this subsection for good cause shown. The 20
affidavits are subject to the requirements of G.S. 1A-1, Rule 11, and are deemed to be in the 21
nature of answers to interrogatories propounded to t he parties. Any party failing to supply the 22
information required by this subsection in the affidavit is subject to G.S. 1A-1, Rules 26, 33, and 23
37. During the pendency of the action for equitable distribution, discovery may proceed, and the 24
court shall ent er temporary additional orders as appropriate and necessary for the purpose of 25
preventing the disappearance, waste, or destruction of marital or separate property or to secure 26
the possession thereof. 27
Real or personal property located outside of North Carolina is subject to equitable distribution 28
in accordance with the provisions of G.S. 50-20, and the court may include in its order 29
appropriate provisions to ensure compliance with the order of equitable distribution. 30
…." 31
SECTION 3.2. Section 3.1 of this act becomes effective October 1, 2025, and applies 32
to actions or claims filed on or after that date. 33
SECTION 4. Except as otherwise provided, this act is effective when it becomes 34
law. 35