If You’re Not Confused, You’re Not Paying Attention – Updates to N.C.G.S. §50-20
By Susan Simos and Ketan Soni
Has everyone heard the big news? No, not how good “The Life of A Showgirl” is or how bad UNC Football is, but that there were edits to our beloved ED statute. Attached are the edits to N.C.G.S §50-20 made pursuant to Session Law 2025-25, effective October 1, 2025. See PDF page 100.
[Simos Says]
Since this change, there has been a lot of discussion about what exactly the changes mean and what their practical effect is on the law of equitable distribution as we know it. The short answer is, we don’t know. And we probably won’t know until the issue is litigated. The discussion amongst various experienced family law practitioners has resulted in more questions than answers, and the one thing we all agree on is that we don’t agree, at least not on all of it.
[Soni Says]
We won’t even know after it’s litigated. This is the result of unclear intentions. The amount of extra strife these statutory changes will induce is incalculable.
[Simos Says]
Here are initial thoughts from some of us who have spent time going down the rabbit hole of, “but what does this mean?”
- There seems to be consensus, based on the plain language of the definition of Marital Property, that the presumption that real property creating a tenancy by the entirety acquired after the date of marriage and before the date of separation is marital property. And that the presumption may be rebutted by the greater weight of the evidence.
[Soni Says]
On this, we agree!
[Simos Says]
- The questions seem to stem from the various readings and interpretations of the changes to the definition of Separate Property. Some questions that have come up are:
- Does the change apply to actions filed before October 1, 2025?
- Does it apply only to actions filed after October 1, 2025?
- What would be sufficient evidence to overcome the presumption, i.e., what is “by the greater weight of the evidence”?
- Does it matter when the deed was entered and what the law was at the time?
- Does it matter if the acquisition as Tenants by the Entirety was the result of a transfer of previously owned real estate or the joint acquisition of newly acquired real estate with the source of funds being one spouse’s separate property?
Regarding the effective date, the Supreme Court of North Carolina has previously held that “No Statute could be retroactively applied to impinge on vested rights.” Painter-Jamieson v. Painter, 163 N.C. App. 527, 533 (2004) and further that “a statute will not be construed to have retroactive effect unless that intent is clearly expressed or arises by necessary implication from its terms.” In re Mitchell’s Will, 285 NC 77, 79-80 (1974). In addition, “the application of a statute is deemed “retroactive” or “retrospective” when its operative effect is to alter the legal consequences of conduct or transactions completed prior to its enactment.” Twaddell v. Anderson, 136 N.C. App. 56, 66 (1999).
Therefore, I would contend that as to real property, the effect of the change in the law, whatever it is, only applies to real property acquired after October 1, 2025.
[Soni Says]
Section 49 says: This Part becomes effective October 1, 2025. To me, this means the change:
- Applies to actions pending right now;
- Does nothing to change the sufficiency of the evidence requirement;
- Can be read as either changing the entire scope of all deed transfers in the past or only to future conveyances. However, see my comments below.
[Simos Says]
- Here are some different interpretations of the revised statute:
It appears that the language added to the definition of Separate Property, “Real property acquired by gift from the other spouse during the course of the marriage is considered separate property only if this intent is expressly stated in a written agreement separate from the conveyance in accordance with subsection (d) of this section. The act of conveying property from one spouse to the other does not in itself state this intent” is intended to preserve the presumption of property acquired as Tenants by the Entirety when the property was owned by one spouse and later re-deeded in the name of both spouses as TBE.
But then the statue goes on to say, “Property acquired in exchange for separate property remains separate property regardless of whether the title is in the name of one or both spouses and is not considered marital property unless the intent for the property to become marital property is expressly stated in writing. The act of acquiring the property does not itself state this intent.” This provision appears to imply that the deed creating a TBE ownership interest is not itself, alone, sufficient to create a presumption of the gift to the marriage if the source of funds for the acquisition was separate funds that can be traced. One interpretation is that the use of separate funds for the acquisition of TBE real property is sufficient evidence to overcome the presumption by the greater weight of the evidence.
[Soni Says]
I think there is only one interpretation that must be read in pari materia:
- The presumption that anything titled as tenants by the entireties is still presumed to be marital property. That’s a specific statement related to real property. (1b) last 2 sentences
- Then, in (2), the “separate property” changes refer to how:
- Property, other than real property, is considered separate only if the intent is expressly stated in writing. That refers to “stuff,” not “dirt.
- “Dirt” can be gifted to other spouse’s “separate property” only if it’s expressly stated in a non-deed document. Therefore, I can only make “dirt” my wife’s separate property with an agreement in writing.
- Then, the killer sentence:
Property acquired in exchange for separate property remains separate property regardless of whether the title is in the name of one or both spouses and is not considered marital property unless the intent for the property to become marital property is expressly stated in writing.
My proposition: This does not apply to real property titled as tenants by the entireties. That specific situation is dealt with above. This sentence is a “general” sentence. Specific wins over general.
This really applies to things like cars or bank accounts titled jointly, or perhaps real estate acquired as JTWROS or tenants in common. Not tenants by the entireties.
[Simos Says]
At the end of the day, we likely won’t know the application of this change until it is litigated or until it later changed because of the confusion it creates. Either way, knowing there is a change, and thinking through the different interpretations and applications, is likely the most important thing we can all do. It is in being able to argue in the margins, look outside the box, and assess the risk and uncertainty in each position we take that we make ourselves better lawyer and advocates.
[Soni Says]
Agreed! Also, there are already multiple conflicting interpretations of ED statutes. Where I disagree is that this needs to be clarified. Someone needs to send this to the court of appeals asap so we can go back to doing our jobs with some certainty.
[Knock, Knock – Cheryl Howell enters the chat]
This is how I read the statute as amended:
Regarding the effective date, Ketan says it probably applies to conveyances made on or after Oct. 1, 2025, and that is consistent with how the Court of Appeals has applied the last two amendments to the divisible property statutes. Warren v. Warren, 75 NC App 509 (2006)(change made effective October 1, 2002, applied to payments made on or after that date), and Lund v. Lund, 244 NC App 279 (2015)(change made effective Oct 1, 2013, applies to payments made on or after that date). So, I think it is reasonable to assume the court will do the same with this amendment.
Personal property acquired by one spouse by gift from the other during the marriage will be marital property, unless the intent that it be the separate property the receiving spouse is expressly stated in writing. [This is what the law always has provided, except now it is clear that the ‘contrary intent’ must be in writing.] So, if husband gives wife the bracelet he inherited from his grandmother for wife’s birthday, it will be marital property unless he states otherwise in writing.
Real property acquired by a spouse by gift from the other spouse will be marital property, unless a contrary intent is written in a document other than the deed transferring the property to the receiving spouse. [This also has always been the law (except for the separate writing provision)]. As McLean held, based on a common law presumption older than equitable distribution, when separate property provides the consideration for the acquisition of property held by the spouses as tenants by the entirety, a gift is presumed. I think the intent of the revision is to clean up the language and to specify that if the gift is not intended to be treated as marital property, the parties must execute an agreement separate from the deed to provide that the property will not be marital property in equitable distribution. I think there has been concern that if the language about marital property and equitable distribution is included in the deed, spouses will sign without knowing what they are doing.
Then the amendments make only clarifying changes to the exchange provision, and I think it says the same thing it said before. Property acquired in exchange for separate property remains separate property, regardless of whether title to the new property is in the name of one spouse or both. The statute did say “whether title is in the name of the husband or wife or both” but now says “one or both spouses.” Any intent that the new property be marital property must be in writing at the time of the exchange, and intent that the property becomes marital cannot be presumed from the exchange. [This can apply to real property held by spouses as tenants in common rather than as tenants by the entirety; the gift presumption only applies when title is taken by the entireties]. So, using part of the Fountain case as an example, if husband’s separate airplane is sold and a note for the purchase price is taken ‘in exchange’ for the airplane, that note will be separate property even if the note is payable to both husband and wife. That has always been the law, but there has been frequent confusion by some that taking the new property in joint names raises a presumption like that which arises when property is taken as tenants by the entirety.
[Simos Says]
While my general rule of thumb is what Cheryl Howell says the law means, is what it means, I fear that there remain arguments to make in the name of advocacy in the margins on this issue. With that said, perhaps by knowing what will be taught to judges and how Cheryl interprets the changes, we can minimize the impact of uncertainty on our clients and cases.