Articles Posted in Property Division

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13062458_1042739802458603_2436945721037467362_nBy: Dana M. Horlick, Attorney, Woodruff Family Law Group

 

Have you wondered how much of your estate is your spouse entitled? What happens to all of your assets when you die? Do you have much control over the disposition of your estate? Does having a will make a difference? To demonstrate the nuances involved in determining how much your surviving spouse is entitled to, I am going to set up a hypothetical, with a Greensboro couple – Rocky and Petunia.

Petunia owns 40% of a closely-held business started by her family, Home Grown Lawn Care, and will likely inherit another 11%. Petunia’s brother will inherit the other 49%. Petunia is engaged to Rocky, an engineer with a promising future, who has joined an engineering firm. To set up the financials, Harry makes $70,000.00 per year. Petunia, as a Vice President for Home Grown Lawn Care, has a salary of $60,000.00 per year and typical K-1 dividends of another $25,000.00 per year. Petunia also gets a tax distribution to pay the federal and state income tax on the K-1 distribution.

Neither Petunia nor Rocky have been married before, have any children, or have any college debt. They do, however, have the following assets: there are Petunia’s shares in Home Grown Lawn Care valued at $100,000.00; a 401(k) with $10,000.00 for Petunia; and a 401(k) with $10,000.00 for Rocky.

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              By Carolyn Woodruff, North Carolina Family Law Specialist, CPA, and CVACarolyn

I am constantly amazed at how people going through a divorce “fight” over “stuff” like a tea cup, a train set, a doll, or a stuffed animal. Generally, when I am using the word “stuff,” I mean personal property like tables and chairs, jewelry, or sentimental items from childhood.  The items have very little monetary value usually (some jewelry and collectibles excepted).  Sometimes the items have great sentimental value.  So, why the fight?

The columnists “Soapbox” in the Sunday magazine Wall Street Journal inspired me to contemplate personal property and its role in our lives.  Jay Leno was one of the columnists, and he talked about his one hundred and fifty cars and one hundred and seventeen motorcycles, all in working condition.  He likes the story behind his cars.  Pat Cleveland considers expensive items “meaningful” and indicia of success, perhaps why so many like Louis Vuitton purses.  Someone commented on behalf of Barbie, the Mattel doll, who states her accessories of a Corvette or outfits create imagination.

In a divorce, anger and striking out at the other side frequently takes the form of snatching and holding hostage a special, sentimental item.  So as a boy, perhaps you collected fishing lures.  The lures bring back memories of special travel and times, but have no monetary value.  There is the pink trout lure that grandma bought you when she took you to the Colorado mountains to fly fish for trout.  Priceless!  And in your divorce, your ex-wife wants to make it an earring.  Oh boy!  Continue reading →

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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.

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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 →

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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…

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