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Divorce and Real Estate

06 Oct

Law Offices of Kasuri & Levy
{A Boutique Divorce and Family Law Firm}
340 US Highway 1 North
Edison, New Jersey 08817
Tel: (732) 253-7630
Fax: (732) 253-7632
Email: [email protected]
Web: edisondivorce.com

“Our Success Depends On Your Success”

Divorce and Your Real Estate

Dispostion of the family home frequently causes problems in a divorce. Custodial parents may want to hang onto the home for the sake of the children. Perhaps one or both spouses can’t afford to purchase a similar replacement home. Much depends upon the amount of equity in the home and the ability of each spouse to keep it.

The following is a portion of a chapter from Divorce Strategy that contains information to get you started on the road of evaluating your divorce decision about your real estate.

For most couples the family home is the highest valued asset they will have to divide in their divorce. Its division is usually fraught with controversy for varying reasons. It may be difficult to value, is not readily converted to cash, costs a substantial amount of money to maintain and has implications of federal and state tax liability. As if all those things were not enough, your family’s emotional attachment to your real estate, in particular a family or vacation home, can cause you to make an irrational or poor decision at the time of the divorce. Your family may be haunted by that decision for years after your divorce.

Some questions that you need to answer are:

  • Should you sell the family home?
  • Do you keep it until the children are grown?
  • Should you keep the home and buyout your soon to be ex-spouse, or vice versa?
  • Can either of you afford to keep it after the divorce?

The answers to these questions and others can help you avoid or plan for problems associated with your real estate. Historically, the family home is the asset that most often causes controversy both before and after a divorce.

The principal reason for this problem is the timing of the sale of the home and the division of the net proceeds. Both events frequently occur some time after the divorce. In addition, couples seldom plan as they should for the payment of household maintenance and upkeep during the pendency of the divorce. At first glance the family home appears to be the easiest asset to identify and describe. For purposes of a divorce, the description of your ownership interest in your home and other real estate can be very complicated with pitfalls for the unwary. As with the division of personal property, the rules and laws regarding the division of real estate vary from state to state. Consult with your lawyer about your rights and responsibilities after you have read this section and put together your worksheets.

Before you see your lawyer, gather the necessary documents and records about each piece of real estate. Get the documents not only for the property titled in your name, but for all the property in which you or your spouse has an ownership interest. This includes property that you own in either of your names alone, jointly with another person or property owned by a trust or business in which either of you have an interest.

Key Factors

There are six key factors about your real estate that affect the handling of the asset or the distribution of the net proceeds from the sale of the asset in a divorce. The factors are:

  • identification of the type of real estate and the type of ownership interest you have in the property
  • the ownership history of your real estate
  • real estate, income and capital gain taxes
  • debts, such as loans and tax liens, that are secured by the real estate the value of the real estate
  • the plans you must make to pay for and maintain the real estate during the pendency of the divorce and afterward

The following sections describe in detail these six factors.

Identification

As previously mentioned, most couples own an interest in real estate in the form of a family home. Other types of real estate that you may own are vacation property, rental property, commercial or office buildings, buildings on land leases, vacant land, mineral rights and other types of special use real estate. Whatever type of real property you may own, each one has unique features that could affect how you can utilize it in your divorce, especially in the context of a settlement agreement. The following sections of this chapter contain examples of some of the methods you might use.

How you hold title to the real estate may determine, in large part, what interest you and your spouse have in the real estate. Most married couples own property as tenants by the entirety and each spouse has an undivided one-half interest in the property. A divorce ends the ownership in tenancy by the entirety. Joint tenancy is similar to tenants by the entirety except that the owners are usually not married to one another. In joint tenancy and tenants by the entirety, if one of the owners dies, the deceased person’s interest passes to the other owner by operation of law. Another way of holding title is as tenants in common. The interest owned by each tenant in common is divisible and can be inherited by the owner’s heirs. This is customarily the way that unrelated persons, including divorced people, own real estate together. It may be the way that you and your ex-spouse own your real estate after the divorce.

History of Ownership

It is important to establish and document the history of your real estate ownership because each parcel’s history affects the property’s net worth. For example, real estate has tax implications that are usually assumed by the person receiving it in a divorce. Additionally, the history of your real estate helps you determine if the real estate that was owned before the marriage or inherited during the marriage is marital or separate property. Finally, the history of the land usage enables you to analyze the financial and environmental risk, if any, you could incur from owning the property.

Prepare a history of your home ownership for each property you have owned, including those which you have sold. Make notes about any miscellaneous information that is important about the real estate. Put together any source documents you used to back up your information. Organize your documents so that your history table is the first document in your real estate file. Then attach the supporting documents in descending or ascending order to the file folder. Some of the relevant information you need for each piece of real estate is:

  • Address, purchase price and date purchased
  • Down payment amount and source of funds for the down payment
  • Original loan amount and current balance
  • List of improvements you have made and their cost depreciation claimed on any prior year’s tax return
  • Insurance proceeds received from any claim
  • Costs to repair any damages or restoration costs
  • Date sold, sale price, costs of sale and net proceeds

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Disclaimer
The author and publisher of this article have done their best to give you useful and accurate information. This article does not replace the advice you should get from a lawyer, accountant or other professional if the content of the article involves an issue you are facing. Divorce laws vary from state-to-state and change from time-to-time. In addition, it is a very fact-specific area of the law, meaning that the particular facts of your marriage and divorce, as well as other external factors may determine how the law is applied in your situation. Always consult with a qualified professional before making any decisions about the issues described in this article. Thank you.

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Child Support & College Support

15 Sep

Child Support & College Support
by Laura Johnson

Do you, as a divorced parent, have a legal duty to pay for your child’s college education? The answer is yes, no, or maybe depending upon the state in which you are divorced.
You could be ordered to pay for all or a portion of your child’s college education if your divorce state has a law giving a court the power to award college support, also called post-secondary or post-minority support. College support may be in addition to child support, a part of child support, or a separate payment after regular child support ends. It can be used to pay for an education at a college, university, vocational school, or other type of post-secondary educational institution.
A court having the power to order college support may consider several factors when ordering you to pay for your child’s college education. Some of these factors are:
• you and your ex-spouse’s financial resources,
• your child’s financial resources,
• your child’s aptitude, ability, goals and interests,
• you and your spouse’s expectations for your child when you were living together,
• standard of living the child would have had if you had not divorced,
• you and your ex-spouse’s standard of living,
• you and your ex-spouse’s level of education,
• the post-secondary education of the child’s siblings or half-siblings,
• the nature of the post-secondary education your child wants, and
• your child’s age.
These factors vary from state to state, but logic demands that each one should play some part in the decision-making process.
Even if you and your spouse don’t get divorced in a state that has a law for some form of college support, you can agree to the payment of college support. The agreement must be in writing and must clearly and specifically describe each parent’s duties regarding the payment of college support. It may also have one or more specific limitations to act as a guide or cap. Your state may have case law (decisions from an appellate court) setting out what terms must be in a college support provision so that it can be enforced by a court, either in a separate contract suit or by the divorce court.
Examples of some types of limitations you might find in the college support provisions of a divorce agreement are:
• limiting you and your ex-spouse’s college support obligation to a maximum number of consecutive semesters, with summer or winter abbreviated schedules not counting as a semester
• capping the annual payment that you or your ex-spouse is responsible for paying
• tying each of your respective portions to the then-cost of a particular educational institution, usually a state college or university, the college the parents agree the child can attend, or the school the child is attending at the time of the agreement
• describing the items to be included as post-secondary educational expenses, such as tuition, room & board, sorority or fraternity dues, books, fees, etc.
• detailing how any grants, scholarships or student loans taken out by the child effect each of your obligations
• Describing how any educational saving accounts are to be applied to each of your obligations.
Many parents wonder what responsibility their child has regarding college if his or her parents are under a court order to pay for college. Once again, the answer depends upon the law in your state or the particular facts of your family’s situation. Some states have imposed requirements that a child must meet to qualify for college support. These requirements may be:
• acceptance and enrollment in a post-secondary educational program within a certain time period after graduation from high school,
• taking enough credit hours each semester so that he or she is considered a full-time student achieving acceptable grades in each course so that he or she remains qualified to re-enroll in the same school the following semester,
• providing a copy of grade reports to each parent,
• continued enrollment so that the college enrollment is in consecutive semesters, and/or
• attendance in the courses he or she enrolled in.
If you are ordered to pay college support for your child, don’t assume that you are relieved of the obligation if your child doesn’t qualify for your continued support based upon the items in this list. It may take either an express agreement between you and your ex-spouse or the order of a court to officially relieve you of any responsibility.
If you are the noncustodial parent ordered to pay college support, do you still have to pay your ex-spouse child support? The answer is: maybe, yes, or no depending upon your state law. In some states child support terminates, as a matter of law, when the child reaches the age of 18. In others, the age of termination is 19 or 21. Be aware though, even if your child has reached the age of termination in your state, he or she may still qualify for continued child support under certain circumstances, such as enrolling and attending a post-secondary educational program or having a physical or mental disability that precludes the child from becoming self-supporting. If you are in doubt, always consult with a lawyer about whether child support stops, is reduced, or stays the same when college support is also being paid.
When ordering post-majority support the court could decide to look at the following expenses that a custodial parent might incur for a child who is attending college:
• transportation expenses to and from school,
• living expenses while at home,
• one time expenses to buy necessary items for the child to set up a “home away from home”,
• the cost of health insurance,
• the cost of medical and dental expenses that aren’t paid by health insurance, and/or
• and any other type of expense necessary for the child’s reasonable living expenses while attending college and living away from home.
In some cases the custodial parent has to pay for the child’s college support before there is a court order instructing the noncustodial parent to contribute. In those situations, the court might have the ability to order the noncustodial parent to reimburse the other parent for all or a portion of the child’s expenses that have already been paid. Alternatively, the court could make an award of college support retroactive to a certain date. So, in addition to an order for future college support, there could also be a lump sum awarded for past support.
If you are ordered to pay both child support and college support, can you get the amount of child support reduced? After all, you’d think that the custodial parent’s costs for a child who is living away from home nine months out of twelve wouldn’t be as much as when the child lived at home full time. Some courts have said that the amount of child support should be reduced to reflect decreased expenses. Others have said it shouldn’t be reduced because the custodial parent still has costs to maintain a home, to provide transportation, and to pay for the child’s necessities. This decision is very fact specific based upon each parent’s legal obligation to pay for the child’s needs while he or she is attending college. In some cases, any expenses that you voluntarily pay might impact a court’s decision, but you need a track record to support your claim.
Can you pay your portion of college expenses directly to the school? Again the answer is maybe. It is another of those things that is very fact specific to your family’s situation.
Can you pay the child support directly to your child instead of your ex-spouse? Maybe, especially if your child is living off campus and has rent, utility, grocery and other regular bills to pay. In some situations, you may be able to pay a portion of the support directly to your child instead of the full amount. That way your son or daughter has funds to pay for direct expenses while at school and your ex-spouse receives a contribution from you toward your child’s housing, clothing, transportation and other fixed expenses.
The age of your child affects whether a court will order college support at the time of a divorce or modification. Absent an agreement between your and your ex-spouse, it’s highly unlikely that a judge will order college support for your child unless he or she is in high school.
Your child’s financial resources might make a difference in the amount of college support you have to pay. It depends upon the nature and amount of the resources. Savings, investments, trust income or assets, other liquid assets, or income from sources other than your child’s employment are some examples of a child’s money that might be used to pay college expenses. Anything left unpaid after the depletion of your child’s money could be paid by you, your ex-spouse, or split between you.
The following items are several things you can do to plan for your child’s post-secondary educational expenses:
• investigate prepaid tuition plans at your state university or college,
• invest in a Coverdell Education Savings Account,
• set up a special savings account for college expenses,
• help your child apply for grants and scholarships, or
• apply for parent loans.
Student loans will not help reduce your out-of-pocket costs as an obligated parent. Most courts won’t permit you to reduce the amount of college support you are ordered to pay by the amount your child is able to borrow. Likewise, if you have a tuition remission program available to you as an employment benefit, you probably won’t be able to use that benefit to cover your portion of the college expenses, while your ex-spouse must use money to pay for his or her portion. Courts generally rule that both parents get the benefit of a tuition remission program.
There is a very small body of law, primarily in Pennsylvania, supporting the claim that it’s unconstitutional for a court to order divorced parents to pay for a child’s college education. After all, parents who are not divorced have no legal obligation to pay for their child to receive a college education. Why should divorced parents not be afforded the same rights and protection as parents who aren’t divorced? See Curtis v. Kline, 666 A.2d 265(1995).
The following states have specific statutes or case law that give courts the authority to order college support in some form: Alabama, the District of Columbia, Georgia, Hawaii, Illinois, Indiana, Iowa, Massachusetts, Michigan, Missouri, Mississippi, Montana, New Hampshire, New Jersey, New York, North Dakota, Oregon, Rhode Island, South Carolina, Utah, West Virginia and Washington. Even though your state isn’t included in this list, you and your spouse can agree, formally or informally, for the payment of college support.

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Disclaimer
The author and publisher of this article have done their best to give you useful and accurate information. This article does not replace the advice you should get from a lawyer, accountant or other professional if the content of the article involves an issue you are facing. Divorce laws vary from state-to-state and change from time-to-time. In addition, it is a very fact-specific area of the law, meaning that the particular facts of your marriage and divorce, as well as other external factors may determine how the law is applied in your situation. Always consult with a qualified professional before making any decisions about the issues described in this article. Thank you.

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About Our Firm

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Our Main Website

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http://edisondivorce.com/html/home.php

Link to our Blog

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Posted in Family Law

 

Welcome to Kasuri & Levy LLC.

08 Sep

Thank you for visiting the Blog Section on the website for:
Law Offices of Kasuri & Levy
{A Boutique Divorce and Family Law Firm}
340 US Highway 1 North
Edison, New Jersey 08817
Tel: (732) 253-7630
Fax: (732) 253-7632
Email: [email protected]
Web: edisondivorce.com

“Our Success Depends On Your Success”

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Please be advised that the information contained on our blogs, articles, websites, and profiles, is not intended as legal advice whatsoever. Please contact an attorney to obtain actual legal advice on your specific matter and particular circumstances.

Thank you.
Law Offices of Kasuri & Levy
Tel: (732) 253-7630
Email: [email protected]
Web: edisondivorce.com

 
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