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Parker Herring discusses equitable distribution, the division of assets, property and debts during a divorce.

TRANSCRIPT: Equitable distribution is the division of property through the court system. And you can do equitable distribution without involving the court and end up with a separation agreement or collaborative law. But it’s the division of all of your property. What is property? It’s the stuff, it’s the things. So you start with real estate, then you go down to what I call paper money accounts, retirement accounts, vehicles, airplanes, motorcycles. And then you look at your debt, and then you have the things in your house. And you try to figure out a way to value all of those items, to classify whether they’re marital or separate, and then after you’ve valued them, to divide them. It’s called “equitable distribution” because in North Carolina, there is a presumption that “equal” is “equitable,” but there are factors which a court can decide, or parties can decide between them, that they don’t want to exactly do a 50-50 split. Although if you do go to court, and have a judge make the decision, equitable distribution is going to result in the parties having an equal division, unless one of the 13 factors is recognized by the judge as compelling.

When you sign a separation agreement, and it includes property settlement, then it’s standard form to state that the court is not going to get involved, so you have divided the property by yourselves without the court getting involved, so there will be no equitable distribution process with the court. And it’s a cumbersome process. You each have to file a complaint, answer a complaint, file an affidavit, which has all of the issues before you, and where you each state whether you feel the property is marital or separate, and what you feel it’s worth. And then you do spreadsheets, and you have pre-trials. So the court process of equitable distribution is very time-consuming.

It’s very important to not file for an absolute divorce, or not let your spouse obtain an absolute divorce, without preserving the rights to have the court decide spousal support and division of property. If your spouse files a complaint, and it doesn’t include division of property, and you don’t answer and make a claim for division of property, then you’ve lost the right to have the court decide that. And then the property will be divided basically by title.

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LLC Ownership & Divorce

LLC Ownership & Divorce

When couples that own a Limited Liability Company or a portion of it want a divorce, in addition to finding a lawyer, they will first have to figure out the value of that LLC. They can hire professional appraisers for the task or just make their own calculations and come up with an estimate. They need to do this because depending on how the business was started, that LLC could be considered as community property, and community property has to be divided during a divorce. However, if there were any restrictions placed on transferring interest in the LLC, not even the court can override them.  

 See Also…Benefits of Chapter 13 Bankruptcy | Low Income Divorce Options

Limited Partnerships and Family Businesses

There are two types of LLCs and they include:

  • Limited Partnerships:  Consists of multiple members where at least one member is a general partner. A general partner is protected from liability, when they put their general partnership under the confines of a limited liability company. What this does is put all the liability on the LLC. The General partner has a say in the running of the limited partnership. Limited partners only have liability equal to what they contributed to the formation of that LLC, but have no say in running it. Spouses that own portions of an LLC need to first calculate the value each of them hold as individuals or as a couple before a final mediation or trial.
  • Operating Business: These are often made up of only one or a few members. A spouse that is a member of such an LLC must put the interests of community estate before their own interests in conducting business related to the LLC.  Since it has only one or a few members, it is easier to divide the ownership interest of that LLC in a divorce. Parties can divide the LLC between themselves, or one party can retain ownership and give the other party assets or property equal to the ownership interest in the LLC. A fitting example of an operating business is a family business.

Forming An LLC

To form an LLC members have to create an origination document called an operating agreement. The following terms are laid out in the agreement:

  • Terms for the operation of the LLC
  • How debts will be paid
  • How members will be paid 
  • The requirements for becoming a member of the LLC
  • How interests can be transferred 

The reason why an LLC’s operating agreement outlines how interests can be transferred is to control LLC membership. It generally outlines the rules, regulations and provisions related to the LLC’s finances. Most LLCs, especially if they are family businesses tend to use this agreement to restrict membership.

It becomes an official contract after all the members sign it, which means all members are bound to its terms. During divorce it is not unusual for couples to be a little confused about how their LLC memberships will impact their divorce. However, experienced divorce lawyers can answer all the questions you have, and will review your case to come up with a solid strategy for the situation. 

Divorce Law FAQ

  1. Getting a Copy of the Divorce Decree
  2. Grandparents Rights After Divorce
  3. Prenuptial Agreements
  4. Who Gets the House During Divorce?
  5. Same Sex Marriage Laws
  6. Top Family Lawyers

Don’t Accept Discrimination!

More info can be found at the Texas Employment Lawyer Website

If you have been underpaid due to discrimination, then you can file a Texas Wage Claim here. We have noticed that there are many people in this country who need to wake up and realize that we are not living in the 1800s. Racial discrimination, age discrimination, gender discrimination…discrimination of any kind; well, it just has to go.

Do not hesitate to enforce your constitutional rights if you feel that you are being treated unfairly.