Articles Tagged with property

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Dear Carolyn, 

We have a small family business. I do all the work with customers; my ex-wife does the bookkeeping. We both own the company as shareholders. We now are now separated. What protections do I need to put in place? She writes checks that are not for business expenses out of the business account.

– Concerned

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Dear Readers, let me hear from you regarding prescription drug abuse and its effect on your family.  In the second Ask Carolyn today, I touch on the Sharon and Ozzy Osbourne divorce and Prince’s death.

Dear Carolyn,

I am a pilot going through a divorce.  My ex is holding my pilot log books hostage.  I have asked her nicely to please give me the log books, and she simply will not do so.  How do I get my log books back from here in this divorce? Does she have any “marital rights” in my log books?

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            Equitable Distribution, in a nutshell, is giving each party to a marriage what they are entitled regarding property acquired during the marriage.  As one of the pillars of many divorce proceedings, it is commonly the most complex aspects, requiring extensive research into the lives of individuals going through a divorce.  In some instances, the parties to a divorce can amicably agree as to how the property acquired during the marriage shall be distributed, and in some instances where parties fail to agree, distribution may be simple due to the nature, amount, and availability of information regarding marital property. In other instances, the parties cannot agree, and the marital assets are numerous, complex, and difficult to find; this situation can create a very tall task for attorneys in properly representing client interests.

A recent North Carolina case, Uli v. Uli (N.C. App., 2017), breaks down equitable distribution in an effort to comprehensively explain how North Carolina courts are to handle these types of claims.  North Carolina courts conduct a three-step analysis to determine what is marital property, what is divisible property, and how to provide for an equitable distribution between the parties.  First, the court must identify and classify the property as marital or separate based upon evidence presented regarding the nature of the asset.  Next, the court must determine the net value of the marital property as of the date of separation. Lastly, the court must distribute the marital property equitably. Smith v. Smith, 433 S.E.2d 196, 202-203 (1993).

The primary issue presented in Uli is the classification of real property in dispute throughout the proceedings.  Classifying property in an equitable distribution case is no walk in the park.  Courts must determine whether property is marital or separate.  Marital property is “all real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of separation of the parties, and presently owned, except property determined to be separate property or divisible property…”  Separate property is “all real and personal property acquired by a spouse before marriage or acquired by a spouse by devise, descent, or gift during the course of the marriage…” N.C. Gen. Stat. §50-20(b)(2015).  “Acquired” is the key term in both definitions. North Carolina courts have adopted a “dynamic” interpretation of the term “acquired” as the courts recognized that acquisition is an on-going process of making payment for a property or contributing to the marital estate, instead of being fixed on the date that legal title to the property is obtained. Wade v. Wade, 330 S.E.2d 616 (1985). With this interpretation, the court realizes that property may have a dual nature consisting of both “separate” and “marital” qualities.

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The two big classifications of property in all equitable distribution cases are “marital” and “separate” property.  These are the ones the get all the attention and are subject to some of the most intense scrutiny and debate; however, there is a third area of property that is equally as important and can at times, prove to be a valuable player equitable distribution cases. Yes, I am talking about “divisible property!”  Continue reading →

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A great aspect of living in the triad area is the rich history of successful businesses that put down roots in the community and prospered over the years.  Greensboro is home to very familiar brands such as Wrangler and Volvo, and right down the road is High Point, which is known for being one of the largest home furnishing manufacturing areas in the country.  Business and industry have been drawn to the area for years, and a growing population provides ample opportunity for entrepreneurs of all sizes to flourish.  Some of the area’s most vital businesses are ones defined as “closely-held,” or more commonly referred to as, “Mom and Pop” businesses.  Unfortunately, sometimes, Mom and Pop do not see eye-to-eye, which may jeopardize the future of these businesses. Continue reading →

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Dear Carolyn,

I have a family member who is separated. Before the separation, this person purchased a house with the deed only in her name and the deed of trust in both names. How will the courts view this property for equitable distribution? My family member thinks that since the property is only in her name that the other party has no rights under equitable distribution. Can you explain the difference between Deed and Deed of Trust?

Thanks

 

Carolyn Answers:

This is a very interesting and quite technical question. So, thank you for writing.  I’ll start first with the definitions of deed and deed of trust.

A deed is the ownership or title documents; by analogy, your car title is a title document for a car like a deed is the title document to your home. Thus, the deed states who owns the home, and generally on the deed the owner is referred to as the grantee. This ownership document (deed) is registered at the Register of Deeds.

A deed of trust is the security for the debt or Promissory Note. When you buy a home or get an equity line on your home, you sign a Promissory Note to the lender. At the time of borrowing, you also sign a document called a deed of trust as security (a lien); if you do not pay the Promissory Note, the signatures on the deed of trust allow the lender to foreclose on the home and take the home away from you. If you examine the deed of trust, you will notice that the lender is the beneficiary of the deed of trust, and that there is a trustee. It is the trustee that forecloses if the Note is not paid. When the Note is completely paid, the lender is required to cancel the deed of trust on the public record at the Register of Deeds. We are one of about twenty states that use the “deed of trust” system.  The majority of states use a “mortgage” system.

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Dear Carolyn,

I am involved in an equitable distribution case and I have a closely-held business in the Triad, which was started by my father. He still owns the majority of the business.  Eight years ago, my father gave me twenty-five percent of the business. I separated from my husband eight months ago. What can I expect in my divorce case related to my closely held business?  How do we go about getting a appraiser to appraise the business?  Can he get any of my stock in the family business?

 

Carolyn Answers:

 You ask a complex, but very interesting, question.  Rest assured that he cannot get any of the actual stock in your family’s business.  The stock itself is separate property because it was given to you by your father.

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Sade Knox, Intern

Chafin v. Chafin, 791 S.E.2d 693 (N.C. Ct. App. 2016)

Facts: In late 1988, Plaintiff and Defendant entered into a marriage that lasted about twenty years before the parties separated in June of 2008. During the years of the marriage, Defendant was an owner of a close to non-profiting auto-sales company in North Carolina. The company operated during the marriage up until the date of separation between the parties, which was when the company had dissolved, in 2008. That following year, Plaintiff filed a complaint seeking equitable distribution of the marital and divisible property and provided inventory affidavits listing the assets of the marital home shared by the parties and the company that Defendant owned. The company’s assets mainly included the bank accounts, vehicle inventory, and Cash on Hand. Defendant failed to follow the trial court’s order to serve his equitable distribution inventory affidavit but, later served an affidavit in response to the proposed pretrial order, objecting to Plaintiff’s classification of the company’s assets.

Because of the evidentiary support provided by Plaintiff, the trial court found that the assets in question were marital property and awarded Plaintiff a lump sum that Defendant was required to pay in monthly payments. Though Defendant argued otherwise, the court found that due to Defendant’s income and assets from his employment, he was capable of distributing award to Plaintiff. Defendant went on to file four motions that were denied, but eventually, the court allowed Defendant’s motion to preserve the record in which evidence was offered to show that not all vehicles listed on the pretrial order were on the auto company’s lot on the date of the parties’ separation. Defendant appeals the trial court’s other findings.

Issue: Whether all the mentioned assets of the auto company and the shared home were marital and divisible property and correctly stated.

Answer to Issue: Yes.

Summary of Rationale: All personal and real property acquired by either spouse, during the marriage up until the date of separation is marital property. Defendant, owner of the auto sale company, deemed the company as personal property and the shared home was real property, both of which were acquired by the Defendant during the period of the parties’ marriage, classifying both the company’s assets and the home as marital property.

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Belot v. Comm’r, T.C. Memo. 2016-113, 2016 WL 3248031 (2016)

Facts: During their marriage, the parties operated a dance studio. The business consisted of an S corporation which was the actual studio, an LLC which operated a boutique selling dance clothing, and another LLC which owned the real estate on which the studio operated. The parties owned each of these entities in different percentages.

The parties were divorced in New Jersey in 2007. The decree incorporated an agreement signed by the parties, in which they agreed to convey interests in the entities so that each of them owned 50% of all three entities. The decree therefore left the divorcing parties as joint owners of the business.

Later in 2007, the wife filed a complaint against the husband, alleging that he had mismanaged the studio, and seeking to remove him as director and employee. This action was settled in 2008 by an agreement, in which the wife agreed to buy the husband’s interest in the business for $900,000 to be paid at closing, and $680,000 to be paid over 10 years.

The husband filed tax returns which claimed that the sale of the business under the 2008 agreement was a § 1041 exchange. When the IRS assessed a deficiency, the husband then appealed to the Tax Court.

Issue: Was the transfer required by the 2008 agreement a 1041 exchange?

Answer to Issue: Yes

Summary of Rationale: The IRS relied upon Reg. § 1.1041-1T(b), Q&A-7, which provides:

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Leesa M. Poag, Attorney, Woodruff Family Law Group

Boy meets girl. They fall in love.  Before you know it, he’s down on one knee with an expensive diamond ring in his hand.  With Valentines Day quickly approaching, it is a scene that is sure to play out all across the Triad.  But what happens when the relationship ends before the wedding bells have even had a chance to ring?  When instead of meeting with a wedding planner, the couple is turning to a family law attorney for advice?

As difficult as a broken engagement can be on a couple, the heartache and hard feelings only grow more intense when the formerly-engaged couple cannot agree on who should keep that shiny souvenir of the marriage that was never meant to be. When the plan changes from walking down the aisle to walking away, there is still that lingering question that must be answered – who gets to keep the engagement ring?

Under the early common law, Courts allowed these jilted fiancés to recover monetary damages when the wedding was called off under a claim of breach of promise to marry.  Though the legal system seems to have realized that you can’t put a price tag on a broken heart and distanced itself from these types of claims, the question of the engagement ring is still a remarkably common dispute facing the courts today.

Should the person who initially purchased the ring be entitled to its return?  If it was given as a gift, should the recipient be allowed to keep it?  The majority of courts have held that the answer to those questions comes down to the intention of the giver.

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