Articles Posted in Property Division

Published on:

A premarital agreement is a contract, signed by two persons who are about to be married. It sets forth rules that will apply when the marriage ends, either in death or divorce. It can also set forth rules to govern how the parties will deal with their property during the marriage.

Married persons do not have to sign a premarital agreement. The law already provides rules for dividing property and awarding support upon divorce, and rules for dividing property upon death. If the two people do not have a premarital agreement, these normal rules apply. The purpose of a premarital agreement is to contract out of the normal rules, and to apply different rules in their place.

To understand whether you need a premarital agreement, you need to first understand the rules that will apply if you do not have an agreement. If those rules are acceptable to both parties, there is no need to sign a premarital agreement. If those rules are not acceptable, and the spouses can agree upon a different set of rules that they both like better, there is reason to sign a premarital agreement.

The rules that apply without an agreement vary from state to state. This blog post will discuss the rules that apply to division of property upon divorce, and why spouses might want to sign an agreement that applies different rules.

In North Carolina, when a marriage ends in divorce, the court divides the parties’ property into two categories. “Separate property” which is usually property acquired before the marriage, or property acquired by gift or inheritance during the marriage. Separate property is not divided upon divorce. “Marital property” is everything that is not separate property, and it is divided equitably between the spouses. The presumption is that an equal division is equitable, but the presumption can be rebutted by proof that another decision is fairer.  See generally N.C. Gen. Stat. (“G.S.”) § 50-20.

Continue reading →

Published on:

Question: I am a mother from Summerfield.  I have been saving for my children’s college, but I am now faced with divorce. My ex-spouse is the owner of the 529 Plan.  What happens to the 529 Plan in my divorce?

Answer:   While the intent of the 529 Plan is to provide college funding for your children, you may find it in the fray of a divorce settlement.  If you make contributions to a 529 Plan during the marriage, then the account value of the 529 Plan is part of that marital estate for the division.  What can you do to preserve the 529 Plan for the children in the divorce settlement?

You need to educate yourself on your 529 Plan and how it fits into your North Carolina equitable distribution.  In a high net worth divorce, there are risks that your child will not end up as the Beneficiary of the college funds unless you take the appropriate action.  Here are some key points you need to understand:

The maximum amount you can add to the 529 Plan is $410,000; The minimum contribution is $25. Continue reading →

Published on:

In North Carolina, estate planning can be difficult with the high divorce rate.  Most who are estate planning want the property to go where it is intended.  The gift tax annual exclusion for 2015 is $14,000 per donor per donee.   This means a married couple can, together, give $28,000 to a son.  If they also make a gift to the daughter-in- law, that means $28,000 times two or $56,000 can be transferred from a married couple to a son and his wife, for example.  Great estate planning, but what happens when the donees get a divorce.

Let’s take a Greensboro, North Carolina couple age 65 with a commercial building with equity of $56,000.  There is debt, but the rents, if the building is correctly managed, services the debt. The son of the couple manages the building.  The son is married.  Therefore, to utilize the maximum gift tax annual exclusion, the sixty-five-year- old couple must give the building to both their son and his wife–a noble estate planning goal, but…

Continue reading →