The Law Office of Lee & Miao

Why Have So Few Student-Loan Borrowers Taken Advantage of Income-Based Repayment?

Divorce Law Basics

Divorce is often a very emotional time for a couple.  Add in the legal aspect, and it can be both mentally and emotionally draining.  An attorney can help you cope with the divorce process by handling the legal aspect, which will allow you to focus on getting started with your new life. 

There are two types of divorces – uncontested divorce and contested divorce.

 

When a divorce does not have to be resolved in Court, it is called an uncontested divorce.  In uncontested divorces, the spouses are able to reach a decision as to the terms of the divorce without going to trial.  Uncontested divorces move more quickly through the Court system and are less expensive than contested divorces.  Every couple seeking a divorce should try to work out the terms of the separation prior to going to Court; either amongst themselves or through mediation or arbitration (with or without an attorney). 

 

When a couple cannot work out mutual terms of the separation due to complex issues such as high financial stakes or custody battle for children, the couple will have to have a contested divorce.  In a contested divorce, the couple will have to go to trial and have the Court decide the unresolved issues. 

 

If there are children involved, a Child Custody Agreement or a custody battle in Court can take on a life of its own. 

 

Alternatively, in order to avoid the time needed to resolve a contested divorce as well as the exorbitant amount of legal fees that each spouse is sure to incur, every couple that is planning on getting married should get either a pre-nuptial agreement or a post-nuptial agreement. 

A pre-nuptial agreement is a contract entered into prior to marriage by the couple.  The content of a pre-nuptial agreement can vary widely, but commonly include provisions for division of property, spousal support, and custody of existing or future children in the event of a divorce.  They may also include terms for forfeiture of assets as a result of divorce on the grounds of adultery.

 A post-nuptial agreement works exactly like a pre-nuptial agreement.  The only difference is that the spouses enter into a post-nuptial agreement after the marriage whereas the spouses enter into a pre-nuptial agreement prior to the marriage.

For more information with regard to divorces and pre-nuptial or post-nuptial agreements, please contact the Law Office of Lee & Miao, PLLC at (646) 559-2321 or visit our website at www.leemiaolaw.com.

A 1031 Real Estate Exchange

Any real estate property owner or investor should consider a 1031 exchange when acquiring a replacement “like kind” property subsequent to the sale of his existing investment property.  The basics behind a 1031 exchange is the strategy and method for selling one property, and then buying another property within a specific time frame in order to defer the payment of a capital gains tax (which is currently 15%).  The entire transaction is treated as an exchange and not just as a simple sale. 

There are two requirements in a 1031 “like-kind” exchange:

1. The total purchase price of the replacement “like-kind” property must be equal to, or greater than the total net sales price of the relinquished real estate property.
2. All the equity received from the sale of the relinquished property must be used to acquire the replacement “like kind” property.

If the price of the replacement property is less than the total net sale price, a tax liability will be incurred for the difference.  This is a partial 1031 exchange and would only qualify for partial tax-deferral treatment.  All of the sales proceeds must go through a “qualified intermediary” in order to take advantage of this tax deferral.  A “qualified intermediary” cannot be someone with whom the parties have had a former business or family relationship; the “qualified intermediary” is an independent and professional facilitator who receives the funds, holds the funds, and distributes them when the transactions occur. 

Both properties in a 1031 exchange rule must be “like kind”.  This means they must both be held for an investment purposes in a business or trade.  Personal residences do not qualify for a 1031 exchange; however owners of personal residence can take advantage of another exclusion.  The “121 exclusion” in the Internal Revenue Code states if the residence is the primary residence for 2 of the last 5 years, the property owner can exclude up to $250,000 from the taxable income ($500,000 for married couples filing joint income tax returns).

There are 2 timelines that are important to a 1031 property exchange.  This is the identification period and the exchange period.  During the identification period, the party selling the property must identify other replacement properties that he wants to buy.  This must be done within 45 days from date of sale of the relinquished property.  During the exchange period, the party who sold the relinquished property must close on the replacement property within 180 days from the sale. 

The main benefit of a 1031 exchange is the deferral of capital gains tax, which can be significant depending on the price of the properties involved.  It is important to work closely with your accountant, tax advisor and real estate attorney to find the best structure of transactions for your needs.  Often times a 1031 exchange can be combined with the 121 exclusion for complete tax deferrals on more complicated transactions.  Additionally, often times an investor will want to buy multiple properties in the 1031 exchange.  The limitation is three properties but there are ways to get around this for more than three properties to maximize the 1031 benefits.  For further information on your real estate property needs, come into our office and speak with one of our qualified attorneys.

For more information on 1031 exchange as well as other legal matters, please contact The Law Office of Lee & Miao, PLLC at (646) 559-2321 or visit our website at www.leemiaolaw.com.