The law is fertile ground for urban myths – common, popular misconceptions about what the law is. Myths may arise because there seems to be a gap between what is “fair” or “logical” and what the law is. Sometimes there is an underlying logical reason for a law, but it is not obvious to the casual observer. Sometimes it turns out that the law is a set of rules without a connection to what seems fair or logical.
Here are some urban myths I see most often:
1. “In a separation or divorce in North Carolina, I get to keep my retirement because it came from my work.” North Carolina’s Equitable Distribution statute says that retirement assets earned between date of marriage and date of separation are marital property (meaning they can be divided between the spouses). The rationale is that, if the parties had stayed married, that retirement income would have supported BOTH spouses during their golden years. Retirement assets that were earned prior to marriage or after date of separation are indeed separate property that the other spouse cannot claim part of.
2. “If I am married and die without a will in North Carolina, my spouse will inherit everything anyway, so I don’t need a will.” That would only be true if you are married with NO children and NO surviving parent. If you are married and have children and you die without a will, your spouse and your children share your estate by a formula that is in the Intestate Succession statute. If you are married, don’t have children, but do have one or both parents alive, and you die without a will, your spouse and your surviving parent(s) share your estate by a formula from that same statute. Anytime someone dies without a will in NC, the Intestate Succession statute governs who inherits. That statute may or may not make sense to you in any given situation.
3. “I can list whoever I want on the beneficiary form for my retirement account, to receive it after I die.” Maybe, or maybe not. If it is a 401(k) or 403(b) account, the federal law ERISA requires that your spouse be the sole primary beneficiary, unless your spouse waives that right in writing. In other words, for a 401(k) or 403(b) plan, your spouse must sign consenting to your naming someone else as a primary beneficiary. This rule doesn’t apply to traditional IRAs or Roth IRAs, where you can name whomever you choose.
4. “If I paid property tax on land, or the tax bill is in my name, I own it.” No, ownership is determined by deeds recorded at the Register of Deeds office, and by Clerk of Court records that show things like inheritance and foreclosures. Ownership is not determined by tax payments or tax bills. Think about it this way: If I went to the tax office and paid tax on your house, or if I told the tax office to send your tax bill to me, why should that allow me to claim ownership of your land?
If you subscribed to any of these urban myths, you are not alone. It helps to know what is behind them and to compare the myths to the reality of the law.
Kim K. Steffan is an attorney with Steffan & Associates, P.C. in Hillsborough. She can be reached at (919) 732-7300 or firstname.lastname@example.org.