Articles Posted in Deferred Sale of Home

Often parties to a marriage buy a home and eventually when the divorce comes are trying to split the marital equities and debts.  One of the hardest assets to divide is the marital residence.  Why is it hard to divide? Often there is a dispute as to how to get the highest value for the marital residence after the parties have separated.  herein lies the case of Easley v Easley a Case out of Alaska Supreme Court.  It involves the divorce of the husband and wife who owned a marital home in Alaska.  The parties were divorce in 2008 and had divided all marital assets including the sale of the marital home.  Or so it seemed. As the husband Easley claimed although the sale of the marital home was ordered by the Trial Court the Husband did not sell the home and divide the proceeds.

Why you might ask did he not sell the home back in 2008 when the judge ordered him to do so? The husband sat on his hands for 7 years claiming he was denied his due process rights in the order to sell the family home.  The husband Kevin claimed the legal defense of mutual mistake as to why he did not sell the marital home.  The home had declined in value and of course he did not want to sell the valuable asset at the time it was ordered.  He also claimed that he was denied his due process rights.

Now the argument for Due process violations has as far as I have ever seen in Family Law Cases showed up on appeal claiming that Mr. Easley was denied his notice and opportunity to sell the family home. Mr. Easley claimed there was actual prejudice, However, the Alaska supreme denied the actual prejudice.

Last spring I wrote about an obscure tax provision known as the “Innocent Spouse Rule” and the potential effect it can have on an Orange County divorce settlement. Needless to say, that is far from the only tax issue that can arise when one is contemplating a divorce. Recently, the Wall Street Journal’s Smart Money column offered some useful pointers on major (and, in most cases, more common) issues that also bear consideration.

While state law governs many aspects of divorce – such as the community property rules that apply here in California – many of the tax implications of a Los Angeles or Orange County divorce are ultimately federal in nature.

As the Journal outlines, a key tax aspect of divorce involves what are known as Tax-Free Transfer Rules. “The general rule is that you can divide up most assets… without any federal income or gift tax consequences,” the paper notes. If such transfers take place after the divorce becomes final, however, it is important that they be written into the settlement. If, for example, the settlement gives ownership of the house to one spouse but gives the other a share of any future sale price, that cash would come to the second spouse tax-free because the sale was made “pursuant to your divorce or separation agreement.” Similar, though often more complex, rules lay out specific treatment for stocks and bonds and for any capital gains realized from them.

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