Atlanta Divorce Attorney Blog

Georgia is an equitable division state. This means that, upon a divorce, the property of the parties is divided equitably between them (though not necessarily equally). The exception to equitable division is separate property. In Georgia, “the separate property of each spouse shall remain the separate property of that spouse.” OCGA §19-3-9. Basically, this means that any separate property is not included in the marital estate and, thus, is not subject to equitable division.

Some examples of separate property include an inheritance, gifts, real property or bank accounts. One must be careful, however, to keep separate property separate, or it may convert into marital property subject to equitable division. Consider, for example, if a spouse inherits a large sum of money from a deceased relative. If the spouse puts the money into a separate account bearing only that spouse’s name and does not commingle the funds with marital funds, the account will continue to be treated as separate property, and that spouse would take the entire account upon divorce without any offset to the other spouse. However, if the spouse adds the inherited funds into a joint account in the names of both spouses, or opens a new account but adds the other spouse’s name to that account, he/she is treating the funds as marital, rather than separate, and they will likely be treated as marital upon divorce. In addition, if it is a separate account, but both spouses subsequently deposit funds into it, a portion of the account may be treated as separate and a portion treated as marital.

Separate property can be a complicated issue during a divorce, particularly if funds have been commingled. The calculation for figuring out how much is separate and how much is marital can be complex and, if not done correctly, can result in the entire asset being treated as marital and subject to equitable division. It is important that you speak to an experienced family law attorney if you are dealing with this issue in your divorce.

As described in Debt and Divorce in Georgia, Part 1, many divorcing couples have significant debt issues. These debt issues may be in the form of credit card debt, home mortgages, or multiple home equity lines of credit. Regardless of the type of debt, one thing is clear – although debt can be a significant issue for married couples, it becomes a much bigger problem to deal with upon divorce.

When spouses choose to settle the issue of debt division between themselves, there are typically three viable options for the couple to choose from:

1. Agreeing to pay off debts prior to divorce - If you and your spouse have cash, or if you have property that you can sell for cash, paying off your debts prior to divorce is simpler and safer for both of you. If you can work together to solve the credit issues, sometimes that is the best way. If this route is chose, there will be no uncertainty about the eventual cost of the debt, and you both will know exactly what you have as you begin your new independent lives.

2. Agreeing for one spouse to take primary responsibility for the debt - If you agree to be responsible for a debt, you need to know exactly how much debt you are responsible for, and what you need to do to get the debt satisfied. This may necessitate you communicating with your soon to be ex-spouse concerning how to contact creditors or how much certain monthly payments will be. Be sure to obtain all the information you can about any debt before agreeing to take responsibility for it upon divorce. On the other hand, if you agree that your spouse will be responsible for a debt that the two of you share, be warned that you are still vulnerable. Although your attorney may insert some type of indemnity clause in your agreement in which your spouse agrees to hold you harmless for the repayment of the debt, this indemnity clause is only binding between you and your spouse, not on third parties. This means that even when your spouse agrees to pay off the joint credit card debt and agrees to indemnify you for it, if your spouse later does not pay off the debt, the credit card company could come looking for you and make you pay the debt. If this were to occur, you would indeed have a claim against your ex-spouse for payment of the debt, but enforcing your marital dissolution agreement in this regard would necessitate you initiating a completely new legal action. This is why many choose to take the above mentioned option, if at all possible.

3. Agreeing to take equal responsibility for the debts - Agreeing to share equal responsibility for payment of a debt is potentially the worst option. Not only do you increase the extent to which you have to continue communicating with your ex-spouse about money after the divorce, but you still run the risk that your ex-spouse will default on the debt that he or she is responsible for, thus leaving you vulnerable to third party creditors.

Your goal upon divorce is to limit your entanglement with your ex-spouse, no to increase it. Thus, instead of agreeing to share a given debt equally, divide up your individual marital debts some roughly equal fashion according to how the debts was incurred and according to who logically should be responsible for the debt. Your goal is to finish with a list of debts for which you have sole responsibility, and a separate list of debts for which your spouse has sole responsibility.

By A. Latrese Martin, Associate Attorney, Meriwether & Tharp, LLC

As a young divorce attorney in the blossoming stages of my career, I have noticed a pattern in many of the cases that I have come across: more and more divorcing couples have significant debt issues. These debt issues may be in the form of credit card debt, home mortgages, or multiple home equity lines of credit. Regardless of the type of debt, one thing is clear – although debt can be a significant issue for married couples, it becomes a much bigger problem to deal with upon divorce.

How much do you owe?

This may seem like a simple question, but it is an essential one. Georgia is an equitable distribution state, meaning that upon divorce both assets and debts will be divided equitably or fairly. However, before any division is made, it is essential to know exactly what is being divided. This is so, especially regarding marital debts, because without full disclosure by both spouses of all the marital debts, one spouse could potentially be left liable for a debt that he or she did not accumulate and did not even know about during the marriage.

In fact, if your spouse has been secretive about your joint financial affairs, you may be totally unaware of how much debt is involved. If this is the case in your situation, your first step should be to try to determine exactly what you are dealing with. Consult with a knowledgeable divorce attorney so that he or she may help you determine the amount of debt that you are aware of and to implement tools like the discovery process to ascertain the amount of debt possibly accumulated by your spouse without your knowledge. Only when you are aware of your complete marital financial picture will you be able to determine how the debt should potentially be shared between you and your spouse upon divorce. For example, it is common for debts that are secured against an asset, like mortgages and car loans, to be retained by the spouse retaining the associated asset. However, unsecured debt, like credit card debt, is often more difficult to deal with.

How should marital debt be divided?

As mentioned above, Georgia courts divide marital debts and assets and debts equitably or fairly upon divorce. But, what does that really mean? There are several cases concerning the meaning of equitable division in Georgia; however in sum, the division of assets and debts upon divorce depend on the circumstances of each case. Thus, there is no formula or set fraction of marital assets or debts that each spouse is required to be responsible for upon divorce. For this reason, many couples seek to settle the issue of asset and debt division among themselves in order to come to the conclusion that works best for each spouse.

By A. Latrese Martin, Associate Attorney, Meriwether & Tharp, LLC

A Notice of Lis Pendens is a powerful legal tool that may be used in the context of divorce. Although a Lis Pendens may be a very effective legal tool if used correctly, many are not aware of what it is or how it may be used during a divorce action.

Lis Pendens is a Latin word that means “pending lawsuit.” Modernly, Lis Pendens refers to a notice of a pending lawsuit that is recorded in county real estate records. A Lis Pendens may be filed by either plaintiff or defendant and its purpose is to provide notice of a claim involving specific real estate to potential buyers and lenders. As mentioned above, a Lis Pendens is a very powerful legal tool that may be employed by a party to a divorce suit because generally, once a Lis Pendens is filed and properly recorded, any transfer of that property by either party will be subject to the final verdict of the jury in the case. O.C.G.A. § 19-5-7.

The effect of a Lis Pendens may be best illustrated with an example: Husband files for divorce against Wife, and contemporaneously with his Complaint for Divorce files a Notice of Lis Pendens concerning the couple’s marital home. The Lis Pendens is properly recorded. During the pendency of the divorce, Wife places the home for sale and eventually sells the home the Buyer. At the end of the divorce matter, the Court in the divorce case awards the marital home to Husband. As a result, Buyer loses the home to Husband, and Buyer must try to get his money back from Wife.

So, although a Lis Pendens does not technically prevent a sale of or loan on real estate, it does do so practically because most prospective buyers, lenders and title insurers are very reluctant to become involved with property that could be adversely impacted by a pending suit. If a Notice of Lis Pendens has been filed in your case, please note that a valid notice of Lis Pendens remains effective only until a final judgment has been entered in your divorce. Vance v. Lomas Mortgage USA, Inc., 263 Ga. 33 (1993). If you have specific questions about how a Lis Pendens affects your specific case, contact a member of our Atlanta Divorce Team.

By A. Latrese Martin, Associate Attorney, Meriwether & Tharp, LLC

As a family law attorney, I have seen several situations where a party previously entered into a divorce settlement agreement and agreed to take on certain debt and, subsequently, became unable to make payments on the debt. The situation becomes even trickier where one spouse agreed to pay a debt that is in the name of the other spouse.

Consider a situation where, under a divorce settlement agreement, the husband kept a car that was in the wife’s name, and the husband was required to make payments on the car. A couple of years later, the husband is no longer able to afford the car payments. What happens?

One option is the wife can file a Petition for Contempt against the husband to try to force him to resume making the payments. A potential problem with this route is that the husband has to miss a payment before the wife can file the petition. In addition, while a judge can hold the husband in contempt and order him to resume the payments, if the husband is unable to do so, the wife’s credit will continue to take a hit for every missed payment.

Another option the wife may consider is trying to reach an agreement with the husband wherein the husband would give her the car back, and she would resume making payments. Under this option, she will protect her credit. If the parties choose to go this route, however, the agreement must be put into writing. If the wife had a lawyer represent her in the divorce, I would suggest that she go back to him or her to draft a document that clearly spells out a new contract between husband and wife. This is because there is a Court Order that says that the husband received the car in the divorce. The Order does not prevent the husband from voluntarily giving the wife the car at issue, but the transaction needs to be in writing in case an issue comes up later and the husband wants the car back.

By Patrick L. Meriwether, Partner, Meriwether & Tharp, LLC

In its article titled: “Has Student Loan Debt Impeded Your Romantic Relationships?” the American Bar Association discussed a new phenomenon experienced by some graduates of institutions of higher learning. This experience includes being rejected romantically, or losing a relationship, because of student loan debt. The article highlights the story of an Art teacher, with nearly $80,000 worth of student loan debt, who reports being dumped as a result of her debt. Although it may be interesting to follow the trend regarding the dissolution of relationships as a result of student loan debt, a slightly more interesting issue is: What happens to student loan debt in a divorce?

In Georgia, upon divorce, marital property, assets and debt are not divided equally or 50/50 as they are in community property states like California. Georgia is an equitable division state. This means that upon divorce, marital property is divided “equitably,” or fairly, according to the determination of a judge or jury hearing the facts of the case. Fuller v. Fuller, 621 S.E.2d 419 (2005) and Arkwright v. Arkwright, 284 Ga. 545 (2008).

However, only marital property, or property that was acquired during the marriage is subject to equitable division. Payson v. Payson, 274 Ga. 231 (2001). Separate property, or property acquired prior to the marriage, or property acquired by gift, inheritance, bequest or devise during the marriage, is generally not subject to equitable division. Bailey v. Bailey, 250 Ga. 15 (1982).

Although there is no case law directly on point regarding the division of student loan debt upon divorce, applying current Georgia case law to the issue, it is likely that student loan debt would be treated just like any other property or debt upon the dissolution of a marriage. Thus, if the student loan debt was acquired prior to the marriage, it will likely be treated as separate property, and the spouse who accrued the debt will remain solely liable for its repayment. However, if the debt was acquired during the marriage, especially if the debt is titled in the names of both spouses, the issue of how the debt may be divided upon divorce becomes more complex.

Although financial issues like the repayment of debt are issues that are best discussed and resolved prior to or during the marriage, unfortunately it is often only upon divorce that these issues are raised and resolved. Thus, if you are currently considering, or going through, a divorce, and you have questions about the division of your assets and debts upon divorce, contact one of the many knowledgeable Family Law Attorneys at Meriwether & Tharp, LLC. We will be more than glad to assist you.

By A. Latrese Martin, Law Clerk, Meriwether & Tharp, LLC

In June of this year, a New York man brought a suit against his ex-wife alleging that she failed to disclose her $1 million shoe collection during their divorce. In his suit, Daniel Shak alleges that his ex-wife, professional poker player Beth Shak, failed to disclose her shoe collection and, thus, he may be entitled to retain more assets under their prior divorce settlement. The story can be found on the web here.

While this story is certainly an extreme, it brings up a few important points that anyone going through a divorce in Georgia should consider. First and foremost is the duty to fully disclose your income and assets. Pursuant to the Georgia Uniform Superior Court Rules, each party to a divorce action (with a few exceptions) is required to complete a Domestic Relations Financial Affidavit. This is document, sworn to under oath, setting forth your income, monthly expenses, assets, and liabilities. It is very important that all assets are disclosed on this document, as failure to do so could later lead to an agreement being set aside for fraud.

The story of Beth Shak’s shoe collection should also be a lesson to be mindful of your spouse’s spending habits. As the article about Shak points out, it seems bizarre that her husband would not realize that his wife has a serious shoe addiction. At a minimum, it calls into question how much of an investigation Mr. Shak and/or his attorneys undertook before the parties entered into a divorce settlement. Each party to a divorce has the right to conduct discovery, which would include examining bank and credit card statements. Presumably, such an investigation would have evidenced Ms. Shak’s high-dollar Chirsitian Louboutin and Manolo Blahnik purchases. Before entering into any settlement agreement, a party to a divorce should make certain that they are satisfied that they know enough about the other’s party’s finances to make a fully informed decision.

If you have questions about how your spouse or ex-spouse’s non-traditional assets might affect your divorce, do not hesitate to contact one of our Atlanta divorce professionals.

By Melissa Tracy, Associate, Meriwether & Tharp, LLC

Many people consider pets to be members of their family. Although you may consider your loving pet to be your child, Georgia law considers pets to be personal property, as opposed to children, and subject to equitable division in a divorce. This means that the court will award ownership of Rover to one party or the other, and will not set up a visitation schedule for each party to spend time with Rover. Unlike with human children, there is no current law that allows the court to consider the best interest of the pet when determining which party will be awarded Rover.

Because Georgia law does not provide any guidelines for courts to follow when deciding which party to award ownership of a pet, divorcing pet owners may find that the best course of action is to enter into a settlement agreement, whether they settle all issues in the divorce or just those related to Rover. In a settlement agreement, parties can agree to a wide variety of arrangements concerning their pet, including one which would allow each party time with Rover after the divorce.

If you are dealing with how to best address your pet’s future post-divorce, we recommend you contact one of our Atlanta Divorce Attorneys to counsel you on your options.

By: Courtney H. Carpenter, Associate Attorney, Meriwether & Tharp, LLC

The short answer to whether trust assets are subject to equitable division in Georgia is no. Now for the longer answer…

The first case worth discussing is Avera v. Avera, 253 Ga. 16 (1984). In Avera, the wife sought to subject the corpus of her husband’s trust to her claims for alimony and child support. She argued the trust was invalid and that, because her ex-husband was the sole settlor, sole trustee and sole beneficiary of the trust, as a creditor, she should have access to the corpus of the fund. The Georgia Supreme Court has made clear in a string of earlier cases that spouses can be creditors, holding that “a spouse seeking alimony in a divorce action, which is an equitable proceeding, is considered a creditor.” See Speed v. Speed, 263 Ga. 166 (1993); see also Carter v. Bush, 216 Ga. 429, 430 (1960).

The Court ultimately found that the husband was not the sole beneficiary of the trust as the remainder was to be divided equally among his children upon his death. The Supreme Court affirmed the lower court’s ruling that the 1) the trust is valid; 2) the husband’s interest in the net income of the trust is subject to alimony and child support claims by the wife; and 3) the principal of the trust cannot be reached by the wife.

Avera was followed by Speed v. Speed, 263 Ga. 166 (1993), another Supreme Court case dealing with divorce and assets in a trust fund. In Speed, the husband was injured in a car accident and received a lump sum settlement which he transferred into an irrevocable trust, naming himself the sole beneficiary. The trust contained a spendthrift clause, which prohibited the involuntary alienation of trust property for the satisfaction of debts or obligations incurred by the husband. The spendthrift clause was found unenforceable because the husband was both sole settlor and sole beneficiary of the trust. As a result, the wife, as a creditor, was able to reach her husband’s interest in the trust for purposes of alimony and distribution of property.

Most troubling in Speed, is that the Court held that the wife was permitted to access not only the husband’s income from the trust, but also the principal of the trust for purposes of distribution of marital property. The court held that the reason for invalidating the self-settled trust was to prevent a person from placing his own assets into a fund where he was the sole beneficiary, effectively shifting the settlor’s assets from one pocket to another. If parties avoid such obvious self-dealing, then the corpus should be left intact.

Speed was followed by another Supreme Court case, McGinn v. McGinn, 273 Ga. 292 (2001). In McGinn, the husband was the beneficiary and co-trustee of a trust containing stock in a company owned by members of his family. The wife argued that because the husband controlled the trust as co-trustee, she ought to be entitled to discover information regarding the value of the stock held in the trust for purposes of alimony and equitable division of marital property.

Because the husband was not the sole trustee, the Court explicitly stated that the corpus of the trust was not subject to the wife’s claims for alimony, child support or equitable distribution. However, the husband’s interest in the trust is one of his assets and is relevant to the determination of alimony and child support.

It appears clear that the rule of McGinn will hold and that where a person does not act as sole settlor, sole trustee and sole beneficiary, the corpus of the trust will not be reached in a divorce action. Fortunately or not, depending on your position, McGinn is similarly clear in recognizing a common theme in Georgia cases that a person’s income derived from a trust is, however, relevant to the calculation of alimony.

By Connor Alexander, Law Clerk, Meriwether & Tharp, LLC

The Supreme Court of Georgia recently heard an appeal of a divorce case where the wife alleged error in calculating her interest in the husband’s pension and setting the alimony amount. Hammond v. Hammond, S11F1978 (2012). In that divorce case, there were very few marital assets, the most significant of which was the husband’s pension, which was vested, but had not yet matured. Id. According to Georgia law, this specific pension could not be attached, subjected to process, or assigned. Id. Thus, the trial court was limited in the ways it could be utilized for equitable division purposes. After a hearing where extensive evidence was presented, the trial court equitably divided the marital assets including an alimony award to the wife of $750 per month for 24 months. In addition, with regard to the pension the trial court ordered the husband to pay the wife alimony “in the amount of $1,250 per month, starting the first month husband receives his monthly pension benefit.” Id. at 2.

The wife appealed, arguing “the trial court erred as a matter of law in determining the amount of the award of alimony pertaining to husband’s pension benefit because it bears no relation to the correct valuation of the pension.” Id. at 3. Specifically, the wife alleged that the trial court should have used the time rule formula to quantify the value of the pension rather than distributing it as alimony. However, the trial court chose to evaluate and distribute the pension as alimony at the wife’s urging and, according to the Supreme Court of Georgia, the wife cannot now complain of error induce by her own conduct. Id. Moreover, a trial court is “given wife latitude in fixing the amount of alimony and child support,” and the Court found no abuse of discretion here. Id.

The wife further alleged that the court erred in calculating the amount of alimony to be awarded from the pension. Generally, alimony is awarded in accordance with the needs of one party and the ability of the other party to pay. The trial court has great discretion within these parameters. The Supreme Court of Georgia rejected the wife’s argument here because there was evidence that the trial court considered several factors, including “the value of the pension, the overwhelming marital debt, husband’s contribution of inherited assets to the marriage, and wife’s recent promotion.” Id. at 5. Thus, the Court held that the trial court did not abuse its great discretion in setting the alimony amount from the pension.