Divorce creates a variety of challenging financial matters for people to address. For example, spouses have to find ways to divide their property with each other.

Divorce typically takes months to complete, meaning that there can be some challenging financial matters that arise between when people decide to divorce and when the courts actually finalize their divorces. There may be income tax matters that spouses have to address the year of their divorce and after their divorce.

Tax credits for children

The ability to claim children as dependents can lead to sizable income tax benefits. Current tax rules do not allow both parents to claim the children separately. Only one parent can claim a child each year. Parents might agree to let each parent claim some of the children in the family. They may alternate years in which they claim the children for tax purposes. Other times, the parent with more parenting time and responsibility might claim the children every year. Negotiating those arrangements can be a real challenge.

Property sales that affect taxes

Selling off long-term investments as a way of dividing their value could lead to capital gains taxes. Withdrawing funds from a retirement savings account without filing the proper paperwork ahead of time could lead to income tax consequences and penalties as well.

Income taxes during the transition

If couples legally separate, then each spouse can theoretically file taxes as though they are the unmarried head of their own household. However, if they simply divorce without legally separating first, they have fewer options for their income tax returns. Only after the courts finalize the divorce can people truly separate their tax responsibilities. Spouses may need to negotiate filing together one or even two more times as part of the divorce process. Additionally, selling or transferring assets during a divorce can potentially lead to tax complications, and spouses may need to plan carefully to avoid unnecessary taxes.

Recognizing that divorce can cause certain tax issues and requires discussions of other tax concerns may help people minimize the financial impact of a complicated divorce.

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Congratulations to our founding attorney, Richard Gantt, for his recent induction into the North Carolina Pro Bono Honor Society for 2023. This award is granted to attorneys in the state who have made valuable contributions to the people of North Carolina, making justice more accessible for those in need. Our firm continues to serve the community and provide North Carolina residents with family law guidance throughout the Triangle Region.

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A 2020 high profile lawsuit filed by this firm against State Senator Rick Gunn alleged that he played a pivotal role in the dissolution of his legislative assistant’s marriage. The two sides settled the case in 2021 for an undisclosed amount in favor of plaintiff Arthur Johns, the husband. Senator Gunn was a political staple for five terms as a Burlington Republican. Although this case received extensive news coverage because of the parties involved, there are a number of different things from this case that shed light on the divorce laws in North Carolina.

Alienation of affection vs. Criminal conversation

The lawsuit’s initial announcement came a few months after the Johns’ divorce. The allegations against Senator Gunn were ‘alienation of affection‘ and ‘criminal conversation’—terms that may sound outdated but are very much alive in the legal system of North Carolina. North Carolina is one of the few states that still recognize this cause of action. This law allows a spouse to sue a third party who they believe is responsible for the failure of their marriage. Despite attempts to amend the law, it remains a tool for seeking damages for marital interference.

Criminal conversation is often confused with alienation of affection, but they are distinct claims. Alienation of affection is a lawsuit against a third party accused of willfully and maliciously interfering with the marital relationship, causing the love and affection between the spouses to erode or disappear. On the other hand, criminal conversation is more specifically about the act of sexual intercourse with someone’s spouse.

The lawsuit did not dispute the consensuality of the relationship between Karen Johns and Senator Gunn. Still, the implications of such a relationship, consensual or not, were at the core of the legal battle. The plaintiff, in this case, Arthur Johns, claims that Sen. Gunn’s relationship with his wife led to the disintegration of their marriage and is seeking compensation for damages.

Diving into the details of an alienation of affection lawsuit

The narrative of the lawsuit paints a picture of a once strong and loving marriage, with two children and a stepchild who all saw Arthur Johns as a father figure. The legal documents suggest that the family’s dynamic and financial stability began to crumble with Senator Gunn’s alleged involvement. Karen Johns, who worked in the legislature since 2011, was said to have been under pressure to be readily available for Senator Gunn beyond regular office hours, including travel and attending social events. The suit alleges that this arrangement laid the groundwork for the affair.

The legal documents also detail how Arthur Johns believes the affair took a toll on him, physically, mentally and emotionally. The affair caused distress and hurt Arthur Johns’ professional life. He claims that it tarnished his reputation, and he faced humiliation due to the actions of Senator Gunn, which he alleges were facilitated by the power dynamics at play within Gunn’s office.

Personal boundaries and privacy during divorce proceedings

The involvement of Arthur Johns’ attorney, Richard Gantt, also provides insight into how sensitive information is handled legally. Gantt provided an email chain to building security that depicted Johns as “visibly upset,” and although it mentioned past domestic violence, it noted that no formal complaints had been filed. This brings up questions about personal privacy, the role of legal counsel in protecting clients’ interests, and the delicate balance between security and individual rights.

Financial damage and seeking justice after a spousal affair

This case offers a view into the financial repercussions of divorce. Arthur Johns claims that the affair not only destroyed his marriage but has also led to him losing half of his property in the ensuing divorce settlement. The lawsuit outlined a range of damages that Arthur Johns estimates between $30,000 and $1 million. This figure reflects the profoundly personal and financial impact Johns believes the affair had on his life. Pursuing this lawsuit is his attempt to seek justice and compensation for the alleged betrayal and its repercussions. This specific amount and estimate further underlines the importance of understanding marital property laws and how assets are divided upon divorce in North Carolina, which follows the equitable distribution model.

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If you’re facing the end of your marriage, it’s crucial to take proactive steps to help ensure a smoother transition into your newest phase of life.

Filing for divorce in North Carolina can be a daunting first step. While the emotional weight of the situation is undeniable, there are also practical matters that need attention.

Understanding service and waiting periods

Once you’ve filed the official complaint, try to make sure your spouse is properly served with the documents. This typically involves the sheriff or a certified process server delivering the summons and complaint. North Carolina enforces a mandatory 30-day waiting period after service is complete. This allows your spouse time to respond and allows both parties to consider mediation or other forms of dispute resolution.

Gathering financial information

The next crucial step is compiling a comprehensive financial picture of your marital estate. This includes gathering documents related to:

• Income: Paystubs, W-2s, tax returns
• Assets: Bank statements, investment account statements, retirement account statements, deeds to property, vehicle titles, etc.
• Debts: Credit card statements, loan documents

This information is essential for equitable distribution of marital assets and debts during the divorce settlement.

Considering child custody and support (if applicable)

If you have minor children, child custody and support become significant elements of the divorce process. The Tar Heel State prioritizes the best interests of the child when determining custody and visitation arrangements. Start gathering documentation that demonstrates your ability to provide a stable and loving environment for your children. This could include daycare records, school transcripts and extracurricular activity schedules.

Exploring dispute resolution options

While litigation can be an option, it’s often expensive and time-consuming. Thankfully, you may consider alternative dispute resolution methods like mediation or arbitration. A neutral third party can facilitate communication and negotiation between you and your spouse, potentially leading to a more amicable and cost-effective resolution.

While navigating a divorce on your own may seem appealing, consulting with an experienced legal team is highly recommended. They can provide invaluable guidance on any concerns you may have throughout and after the divorce, which can be important, given how much is at stake.

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Congratulations to our founding and lead attorney, Richard Gantt, for his recognition in Legal Elite’s Hall Of Fame for Family Law. Winners are voted in as best in different legal categories, in this case best family lawyer in North Carolina, and selected by all members of the North Caroline State Bar.

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A couple that is going through a divorce must take the time to divide all of their assets and debts that each spouse acquired during their marriage fairly. Common assets that require attention include a marital home, vehicles and investment accounts.

Determining how financial investments, such as stocks, bonds and mutual funds, will be split can be difficult. Thinking about each point logically may help you make the most appropriate decisions about each asset when it comes to your unique divorce situation.

How are investments classified for property division?

The property division process begins by determining which investments are considered marital property or separate property. Marital property includes all assets acquired by either spouse during the marriage, while separate property refers to assets owned by one spouse prior to the marriage or received as a gift or inheritance.

How are investments valued during this process?

Once the classification is completed, the next step is to ascertain the current value of these investments. This often requires appraisals or professional assessments, especially if the investments include complex assets like stock options or business interests.

Accurate valuation is critical because it affects how assets are equitably divided. Market fluctuations can also impact the valuation process. This sometimes requires a snapshot of the values at the time of separation and close to the final settlement.

What are the tax implications of dividing investments?

Dividing investments is about splitting assets and managing the tax implications associated with these transactions. For example, selling investments as part of a divorce settlement can lead to capital gains taxes.

Prematurely withdrawing funds from a retirement account may result in penalties and additional taxes. Couples often need to work with financial advisors or tax professionals to understand the best strategies to minimize tax liabilities for both parties.

What options are available for division?

Couples have several options for dividing investment assets. They can sell their investments and split the proceeds, one spouse can buy out the other’s share or they can agree to continue co-owning some assets post-divorce.

Due to the complexity of dividing investment assets in a divorce, each spouse should seek independent legal guidance. This can help to ensure that each person is making decisions that are in their best interests throughout the process, and that arriving at a fair settlement is the overarching end goal of each individual’s approach.

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Married couples often buy homes together. Both spouses are usually named on a mortgage for their shared property and on the deed as a result. When they divorce, there is little question that the home where they lived is part of the marital estate and therefore subject to equitable distribution rules under North Carolina law.

However, not everyone has a straightforward claim to the home where they live. Sometimes, one spouse already owned the house prior to marriage or inherited it from family members. They might then try to insist that the marital home is their separate property during divorce negotiations. Such claims may leave one spouse very concerned about their finances following a divorce.

If a spouse is not on the deed for the marital home or the note for the mortgage attached to it, does that mean they have no interest in the property if they divorce?

Commingling and investments complicate ownership

In theory, assets that one spouse inherited or owned before marriage are separate property. In reality, someone who owns a home before marriage probably relies on marital assets to pay for the property. Houses are expensive to maintain. In situations where one spouse owned the home prior to marriage, they may still have a mortgage to pay. They likely used marital income to cover monthly mortgage expenses, taxes and insurance. Beyond that, the spouses may have invested marital resources in the maintenance and upkeep of the physical property itself.

Both financial contributions toward the property and sweat equity accumulated by working on the home during the marriage could give his spouse a partial interest in the property during divorce proceedings. Establishing how much marital income went toward the maintenance of the property or the fair market value of services rendered could help someone as they prepare to negotiate equitable property division terms with their spouse.

Even if someone cannot request possession of their home in the divorce, they may be able to receive a portion of its equity as part of the marital estate. Those unfamiliar with the law and their rights sometimes agree to highly unfavorable property division settlements. Especially if people hope to pursue an uncontested divorce, they’ll likely require guidance about property division matters to better ensure that their interests are protected as they move forward.

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For many newly divorcing and divorced parents, the time spent with children during holidays can be a painful reminder of a life they imagined with their child’s other parent. Sprinkle the mayhem of the holiday season or spring break into the mix, and you have the perfect recipe for stress, tension and co-parenting disputes.

However, most co-parents can amicably negotiate parenting time over the holidays. With that said, it’s certainly true that an agreeable arrangement isn’t easy to arrive at. It can help to employ time negotiation strategies.

Focused negotiation approaches

One of the foundational pillars of successful negotiation during a separation is clear and open communication. Try to ensure that you and your co-parent are on the same page regarding expectations, schedules and any special arrangements for holiday celebrations.

To facilitate smooth negotiations, consider crafting a detailed co-parenting holiday break plan that outlines how holiday time will be shared. Be specific about the duration each parent will spend with the children and any additional agreements, such as gift-sharing or joint celebration terms.

While having a plan is essential, flexibility is equally important. Unforeseen circumstances may arise, so it’s crucial to be open to adjustments when necessary. This cooperative approach fosters a positive co-parenting dynamic.

Strategies for successful holiday time negotiation

A good place to start is to initiate the negotiation process well in advance to allow ample time for discussion and resolution. This way, you and your co-parent can address potential conflicts early on and proactively seek solutions to minimize stress and uncertainty.

Also, don’t be afraid to utilize modern technology to streamline coordination. For instance, you can set up a shared Google Calendar that both parties can access. This creative solution can ensure everyone is informed of the agreed-upon schedule. This way, you can minimize misunderstandings and promote transparency.

Nurturing emotional well-being

Separation during the holidays can evoke a range of emotions. Encourage both parties to acknowledge their feelings and prioritize self-care. This may include seeking support from friends, family or even professional counseling.

Moreover, establishing new holiday traditions can be a transformative way to embrace change and foster a sense of unity. New traditions can help both parties focus on creating positive experiences for themselves and their children.

Effective negotiation during a separation for the holidays requires a proactive and cooperative mindset. By prioritizing communication, creating detailed plans and embracing flexibility, both parties can navigate this challenging period more gracefully.

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Working out child custody and parenting time is one of divorce’s most emotionally charged aspects. In North Carolina, the court system prioritizes the well-being of the child or children involved.

North Carolina courts usually operate under the assumption that it’s in the child’s best interest to have a strong relationship with both parents. With this in mind, judges often lean towards joint custody arrangements unless there’s a compelling reason to do otherwise. Some considerations that factor into these determinations include the following.

Factors directly related to the child

The child’s age, health and needs matter. Courts may consider the child’s current living arrangements, school situation and emotional ties to each parent. Older children may also be given a voice, although their preference isn’t the deciding factor.

Evaluating parental fitness

The court will scrutinize each parent’s ability to provide the child with a stable, loving environment. This includes physical and mental health, financial stability and willingness to support the child’s relationship with the other parent. Any history of domestic violence, substance abuse or neglect will also weigh heavily on the court’s decision.

Willingness to cooperate

Courts are likely to look favorably on parents willing to work together for the child’s benefit. The ability to communicate effectively and make joint decisions is a significant consideration. However, attempts to alienate the child from the other parent could count against you in court.

Geographical considerations

The physical distance between the parents’ residences can impact the feasibility of a joint custody arrangement. While it’s not a deal-breaker, logistics related to school, healthcare and extracurricular activities will be considered.

Flexibility of work schedules

Both parents’ work commitments and schedules are considered when allocating parenting time. The court aims for a distribution that allows the child to spend quality time with both parents. Parents with more flexible work schedules may be granted more frequent or extended parenting time rights, although this is balanced against the child’s need for routine and stability.

North Carolina courts often utilize mediation to work out child custody arrangements; however, a judge will step in to decide what must happen if the parents can’t come to an agreement on their own. Understanding your rights and how the court will view specific circumstances of your case may help you make decisions that are informed and proactive in nature. Seeking legal guidance can be helpful in this regard.

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Divorce is an emotionally taxing process that compels most couples to grapple with numerous complicated financial matters. In North Carolina, the division of assets and debts is subject to a legal standard known as “equitable distribution” in the event that a couple can’t reach mutually-agreeable settlement terms without judicial intervention. This involves a detailed analysis of the couple’s financial situation, including identifying, classifying, valuing and distributing marital assets and liabilities.

One of the central components of the equitable distribution process in North Carolina is the distinction between marital and separate property. Marital property consists of virtually all assets and debts acquired during the marriage, while separate property generally includes assets owned before the marriage or acquired by inheritance or gift.

Exploring financial accounts and how they are divided

Financial accounts, such as checking, savings and investment accounts, are generally considered marital property if acquired or comingled during a couple’s marriage. Division of these accounts in North Carolina may require a careful analysis of each account’s history, including contributions, withdrawals and appreciation.

Retirement accounts and their complexity in divorce

Retirement accounts like 401(k)s, IRAs and pensions can be some of the most valuable assets in a marriage and are often subject to division during a divorce. In North Carolina, the portion of the retirement accounts earned during the marriage is considered marital property unless a valid prenup or postnup says otherwise. The division of these accounts can be complex, often requiring a qualified domestic relations order (QDRO) to ensure that the funds are divided without incurring penalties or additional taxes.

Alimony in North Carolina and its financial implications

Alimony, or spousal support, is a financial obligation that one spouse may have to pay the other after a divorce to maintain a standard of living comparable to that during the marriage. In North Carolina, there is no set formula for calculating alimony. Factors such as the length of the marriage, each spouse’s needs and earning capacities play a role in determining alimony in a contentious divorce. In an uncontested divorce, the parties can choose to set up a spousal support arrangement in whatever way they deem appropriate.

All financial decisions that you make during a divorce can impact your future. Ensuring that you’re making choices that will benefit you is important. Seeking legal guidance accordingly can help to ensure that your interests remain protected as your situation evolves.

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