How to Transition an LLC to a Corporation by Mike Broemmel - Legal Zoom

Electing to convert a business from an LLC to a corporation is subject to the laws of the state where the limited liability company was organized. Some states have enacted a conversion statute that streamlines the process for conversion; other states maintain the traditional procedures for conversion, which requires multiple steps to complete the process.

Conversion Statute Process

In states that elect to expedite the conversion process, converting an LLC into a corporation requires the filing of a prescribed standard form. The conversion form is available through the Secretary of State's office, or similar regulatory agency, and typically may be filed in person, by mail or online. The form sets forth the intent of the LLC to convert its organizational structure to that of a corporation. The form typically includes an affirmation to comply with all laws applicable to corporations organized in the state.

Traditional Conversion Process

The traditional conversion process represents a more cumbersome, multi-step procedure. Under the traditional conversion process, owners of an LLC, known as members, must vote to convert the entity. A separate corporation is then formed by filing articles of incorporation with the Secretary of State. The assets and debts of the LLC are conveyed to the new corporation and a certificate of dissolution for the LLC is filed with the Secretary of State.

Immediate Tax Consequences

The immediate tax consequences center on how the Internal Revenue Service addresses the conversion. The IRS utilizes one of three categories when dealing with the conversion of an LLC to a corporation. An assets-over conversion exists when the LLC transfers its assets and liabilities to the corporation in exchange for corporate stock conveyed to the LLC. The LLC then transfers the stock to its individual owners. An assets-up scheme involves the transfer of the LLC's assets and liabilities to its owners who then convey the property and debt to the newly formed corporation. An interests-over conversion involves individual owners of the LLC transferring their respective ownership interest in the LLC to the corporation in exchange for a proportional share of the new corporation's stock.

Long-Term Tax Consequences

The long-term tax consequences associated with a conversion arise from the fact that the IRS applies what is called "pass through" tax liability on the LLC form of business. Here, the profits of an LLC are taxed once, at the level of the individual owners. Conversely, with a corporation structure, profits are taxed at the corporate level and any distribution or dividends paid to individual shareholders also face taxation by the IRS; this tax treatment is commonly referred to as double taxation.

www.mikebroemmel.com

 

https://twitter.com/MFBRealEstate

 

www.legal-ink.org

Is a Divorce Decree Invalid if a Financial Disclosure is False?

Typically you and your spouse must file financial disclosures when you divorce. In fact, all states maintain this requirement in some form, except when a divorce is uncontested and you and your spouse agree on all major issues associated with the divorce. If you discover that a financial disclosure was false, your divorce is not void -- but depending on the circumstances, you may be able to get the court to re-address certain financial issues.

Remedy

Simply because the divorce is not set aside by the court, or voided, does not mean that you have no recourse. You have the legal right to go back into court and reopen the divorce case, without setting aside the marriage termination itself. You can request that the court reexamine issues surrounding finances, property and debt in light of the revelation concerning false statements filed by your ex-spouse.

Penalty for Minor Misstatements

If your ex made only minor misstatements, such as slightly understating income, the consequences usually fit the misconduct. Although courts do not condone even minor false statements, particularly when made under oath, a likely resolution will be an admonishment or scolding by the judge, and an order to correct the financial disclosure statement. There will also typically be an adjustment of asset or debt allocation between the parties, if necessary.

Penalty for Major Mistatements

The most significant penalty a court imposes in the aftermath of a significant false statement on a financial disclosure statement is a finding of contempt. What is known as a "contempt citation" results in penalties that may include forfeiture of additional property to the injured spouse or a monetary penalty payable to the court. A judge even has the authority to send your ex to jail pursuant to a contempt citation. However, in the vast majority of cases involving even a major misstatement, a trip to jail is unlikely.

Child Custody and Support

Generally speaking, no adjustment in either child custody or support likely occurs in the immediate aftermath of the discovery of false information in a financial disclosure statement as a means of punishing the wrongdoer. However, if the misinformation resulted in a significant understatement of income, the court may order a recalculation of the parents' child support obligations.

www.mikebroemmel.com

 

https://twitter.com/MFBRealEstate

 

www.legal-ink.org

Shared Custody and Divorce by Mike Broemmel - Legal Zoom

Custody issues oftentimes represent the most contentious aspect of divorce proceedings. As you contemplate a divorce case involving children, understanding the elements of custody determinations is crucial. Shared custody represents one type of custodial arrangement available to courts in different jurisdictions across the United States. Shared custody means that both parents enjoy physical custody of a child on an essentially equal basis. Despite its widespread availability, the laws on when shared custody is ordered in a divorce case vary significantly from one state to another.

Understanding Legal Versus Physical Custody

A court in a divorce addresses two types of custodial issues: legal custody and physical custody. Legal custody references the right of a parent to make major life decisions on behalf of a minor child. These decisions include, but are not limited to, education, health care and religion. Physical custody refers to the parent who actually maintains the child in her residence. "Joint" usually is used in reference to legal custody while "shared" typically is attached to physical custody.

State Laws and Shared Custody

Although many states permit shared physical custody, differences exist between jurisdictions regarding when such an arrangement is permitted. In some states, a preference exists for shared physical custody while in others, the law favors other types of custodial schemes. Some states permit shared custody if requested by the parents, while others impose the arrangement on a family even if the parents object. Other jurisdictions have developed guidelines to be used by judges when determining whether to award shared custody.

Tests for Shared Custody

In some states, courts apply a test when determining the appropriateness of shared custody. An example of such a test is found in New Jersey law. The test is three-prong. First, the parents are required to prepare a parenting plan that establishes the responsibilities of each parent and specific parenting times. Second, each parent is required to have at least two overnight parenting times a week, excluding vacations and holidays. Third and finally, the parents must maintain open lines of communication with each other and be able to jointly make important decisions regarding their children.

Parenting Time Schedules

The theory behind shared custody is that each parent maintains physical custody of the child about 50 percent of the time. A variety of different parenting time schedules exist to further a shared custody arrangement. For example, in one scheme, parents may alternate physical custody week-by-week. In another scheme, one parent may maintain custody a majority of days in a given week, with the other parent enjoying fewer days of parenting time. The following week, the roles reverse. Provided that a shared custody arrangement is deemed fair and provides for a relatively equal allocation of time between the parents, a court is likely to approve an agreement reached by the parents.

Shared Custody and Child Support

On first blush, you might imagine that shared custody eliminates the need for child support because both parents theoretically have the child in their physical care and custody half of the time. In fact, an income disparity of some sort likely exists between the parents, with one parent earning more than the other. In such cases, a child support order may still be established despite the shared custody arrangement.

www.mikebroemmel.com

https://twitter.com/MFBRealEstate

 

www.legal-ink.org

Divorce and Custody Facts by Mike Broemmel - Legal Zoom

In many instances, issues related to child custody represent the most contentious matters between spouses in a divorce case. If you contemplate divorce, you must educate yourself on the basic facts associated with child custody, including essential terminology. By understanding these basic elements of child custody, you position yourself to best protect your interests, and those of your children, throughout the course of the divorce proceedings.

Legal Versus Physical Custody

Legal custody represents the ability of a parent to make major life decisions on behalf of a minor child. These include decisions associated with, but not limited to, education, health care and religion. Physical custody is the right of a parent to have actual custody of a child, typically in that parent's residence. Custody orders or agreements address both of these types of custody.

Joint and Sole Custody

Legal and physical custody can be shared jointly or awarded solely to one parent. Joint legal custody exists when both parents share equally in making major life decisions for a minor child. Joint or shared physical custody occurs when both parents maintain the child in their residence part of the time. Sole legal custody represents an arrangement in which only one parent possesses the right to make major life decisions for a child. Sole physical custody represents a situation in which only one parent maintains physical custody of a child.

Preference for Joint Custody Arrangements

Family law generally disfavors sole custody. Sole custody may be awarded in situations in which one parent is deemed unfit or unable to exercise appropriately the rights and responsibilities associated with legal or physical custody of a child. However, just because a parent is awarded sole physical custody does not mean she will automatically receive sole legal custody as well. In other words, although a parent may not provide a residence for her child on a consistent basis, she still may be capable of making appropriate decisions on behalf of her child.

Best Interests of the Child

In family law cases, including divorce proceedings, courts across the United States apply what is known as the "best interests of the child" standard. This standard requires a court to consider what legal and physical custodial arrangement best protects and furthers the interests of a minor child. Considerations often include which parent traditionally provided primary care for the child, physical and mental health of both parents, and the willingness of each parent to co-parent with the other parent.

Custody and Desires of a Minor Child

State laws vary regarding what effect the desires of a child have on custody decisions. In some jurisdictions, the wishes of a child have no bearing, under the theory that a minor child is not legally capable of making such determinations. On the other hand, other states permit a child to express his wishes regarding custody arrangements, particularly if he is mature or an older child. Overall, however, the desires of a child generally do not control custody determinations.

www.mikebroemmel.com

https://twitter.com/MFBRealEstate

 

www.legal-ink.org

Can a Spouse Get Retirement Accounts in a California Divorce by Mike Broemmel

The division of property in California divorce cases is governed by the community property standard. Community property means that each spouse is entitled to 50 percent of the assets accumulated during the term of the marriage, no matter which party bore primary responsibility for obtaining the property. The community property standard is applied to all types of assets involved in divorce proceedings, including retirement accounts. As a result, in California, a person possesses a legal interest in the retirement account of his spouse in a divorce case.

Community Property Standard

The community property standard assumes that both spouses contribute equally to a marriage, no matter who might earn the most money during the course of the marriage. Property owned before the marriage, obtained during the marriage by inheritance or gift, or obtained after the spouses separate is considered the separate property of each spouse, not community property. As a result, such property is not subject to division upon divorce under the community property law of California.

Division of Property at Time of Divorce

When a divorce case is filed in California, most of the property obtained by a couple while married can be divided, either by their own agreement or by order of the court. For example, bank accounts and other investments can be totaled up and distributed between the spouses in equal shares. Some assets cannot be so easily divided at the time of a divorce without negative financial consequences. A retirement plan, with penalties for early withdrawal, represents one type of asset that often cannot readily be divided at the time of a divorce case.

Property Settlement Agreement

In California, courts prefer spouses reach a settlement in divorce cases. In such a circumstance, the parties enter into a property settlement agreement, a contract that spells out how the assets and debts of the parties are to be divided, including any retirement plans. A spouse can agree to waive an interest in a retirement plan, which can be done in exchange for a larger share of another asset or an increase in alimony. A divorce court approves a property settlement agreement provided that the contract appears fair to both spouses.

Property Division and Judge's Discretion

Absent a property settlement agreement, a judge must exercise his discretion in determining how the property of the parties is divided. The judge must generally follow the parameters of California's community property law, but can make some adjustments in the interests of justice and fairness. As with a property settlement agreement, the judge's order will divide any retirement plans.

Qualified Domestic Relations Order

Avoiding the penalties associated with an early withdrawal from a retirement plan is accomplished through the use of a Qualified Domestic Relations Order, or QDRO. The QDRO establishes the percentages of retirement benefits that are paid to each spouse when the plan reaches maturity.

www.mikebroemmel.com

 

https://twitter.com/MFBRealEstate

 

www.legal-ink.org

Divorce without Financial Settlement by Mike Broemmel - LegalZoom

Divorce laws in most states require the resolution of financial issues before a court enters a final divorce decree. You and your spouse must either sign a marital settlement agreement or a hearing or trial is conducted to resolve financial issues. Some states allow what is called a bifurcated process, a legal term meaning that the laws permit a termination of the marriage before resolving financial issues.

Financial Issues When Filing for Divorce

Although laws vary, in most jurisdictions, you and your spouse must file a financial affidavit, sometimes called a domestic relations affidavit or other name, either when a divorce is filed or fairly soon afterwards. The affidavit provides the court and your spouse essential information pertaining to financial matters. The data is used both in settlement negotiations and as a guide for the judge should the case require a hearing or trial regarding financial issues.

Leeway in an Uncontested Divorce

Courts typically allow couples greater leeway in an uncontested divorce when it comes to resolving financial issues. Courts encourage a divorcing couple to resolve issues themselves, without the need for a divorce trial. This includes using the services of a mediator. The court does review the settlement agreement reached by a couple in an uncontested divorce to ensure that it is fair to both parties.

Delaying Financial Settlement

A few states, such as California, permit a two-step process called a "bifurcated" divorce, in which a couple is divorced before financial matters are addressed. These issues must then be resolved at a later date. At least one state, North Carolina, allows you to divorce without addressing financial issues at all, but if you don't reserve the right to do so before the divorce is final, you forever waive your right to go back and ask the court to divide property or debts or address issues of spousal support later. The couple must advise the court, typically through the petition, response or a motion, that certain financial matters remain unresolved. Taking this step is called "preserving the issue." By preserving the issue, the court holds future hearings after the divorce to resolve these matters.

Pros and Cons

Both pros and cons exist with regard to delaying a financial settlement. You can typically end your marriage faster, especially if your finances are especially complicated. On the negative side, once the divorce is granted, other issues might remain unresolved for an extended period of time. In some cases, once a couple's marriage ends, the two might feel free to move on with their lives and the pressure to resolve other issues decreases, which can cause delays.

www.mikebroemmel.com

 

https://twitter.com/MFBRealEstate

 

www.legal-ink.org

How to Purchase Probate Real Estate by Mike Broemmel - San Francisco Chronicle

Probate is the court process used following the death of an individual to deal with the decedent's estate. Often real estate must be sold as part of a probate or estate case. You can purchase real estate in probate either through an auction or a direct sale. Although there are differences between the two processes for purchasing probate real estate, many of the same requirements exist, no matter which procedure you use.

Attend the real estate auction scheduled by the executor or administrator of the estate. Bid on the property. If you make the highest bid, you obligate yourself to purchase the real estate. Provide the lawyer, executor or administrator for the estate with a certified check to cover the price you bid on the real estate. Typically, the check represents proceeds from a loan already approved by a lender. In lieu of a certified check, you must provide proof of preapproval for a loan that covers the price you bid on the real estate.

Make a direct offer on the real estate to the lawyer, executor or administrator of the estate. If the estate's representative accepts your offer, she will present the offer to the probate court.

Obtain an order from the probate court approving the sale, whether you've purchased the property by auction or direct sale agreement. The lawyer, executor or administrator of the estate is responsible for obtaining this order approving the sale from the court. You cannot finalize the sale without approval of the court.

Probate auction information is available through the legal notices section of the local newspaper and at the office of the probate clerk of the county where the estate case was filed.

 

Once the order approving the sale is issued by the court, the lawyer, executor or administrator for the estate will prepare a deed transferring ownership of the real estate to you. The deed becomes legally effective when it is filed with the register of deeds in the county where the real estate is located.

 

www.mikebroemmel.com

 

https://twitter.com/MFBRealEstate

 

www.legal-ink.org