December 7, 2012

Post-Nuptial Agreements in Georgia

The concept of pre-nuptial agreements is widely known. However, there is another type of agreement that spouses may utilize in order to order their marital and separate property in the event of divorce. These agreements are known as post-nuptial agreements.

What is a Post-nuptial agreement?

Similar to pre-nuptial or ante-nuptial agreements, post-nuptial agreements are legal agreements entered into by both spouses during the marriage that spell out how assets or debts will be divided in the case of divorce or death. Essentially, these agreements are pre-nuptial agreements that are signed after the marriage has occurred. Couples may seek post-nuptial agreements for all of the same reasons that a couple would seek a pre-marital agreement. Couples make take this option because a pre-nuptial agreement was not necessary or not considered prior to the marriage.

Why would a couple enter a post-nuptial?

Couples often seek to enter into a post-nuptial agreement as the result of a major financial change that happens during the court of their marriage, like the occurrence of an inheritance or the immense success of a business. Additionally, couples with blended families may which to enter into a post-nuptial agreement in order to safe guard the inheritance of biological children. For example, a post-nuptial agreement may mandate that a mother's assets pass directly to her biological children, not the her step children, or a husband can limit the total amount his wife would receive from his business assets in case of divorce. Post-nuptial agreements may also be used by couples to protect one spouse from any financial obligations from a judgment against the other spouse or his or her business.

Are post-nuptial agreements enforceable in Georgia?

Georgia has a public policy which favors the enforcement of pre-marital or post-nuptial agreements. However, a court must analyze the agreement according to the three criteria listed below before the agreement may be enforced:
1) Was the agreement obtained through fraud, duress or mistake, or through misrepresentation or nondisclosure of material facts?
2) Is the agreement unconscionable?
3) Have the facts and circumstances changed since the agreement was executed, so as to make its enforcement unfair and unreasonable?
See Blige v. Blige, 283 Ga. 65 (2008); Mallen v. Mallen, 280 Ga. 43 (2005); Gravley v. Gravley, 278 Ga. 897 (2005); Sanders v. Colwell, 248 Ga. 376 (1981).

Ways to Bring up the topic of a post-nuptial agreement with your spouse

If you believe that entering into a post-nuptial agreement with your spouse is necessary or may be beneficial for financial planning purposes, the following suggestions may be helpful is discussing this topic with your spouse:
Make it about "us", not just about “you”. Initiating a conversation about a post-nuptial agreement may not be the most pleasant task; however, ensuring that your spouse understands that the prospect of a post-nuptial agreement is something that can be of benefit to you both may ease any tension caused by the conversation.
Use changes in circumstances to your advantage. If you or your spouse have recently received a big bonus, new job, or an inheritance, that may be the prefect event to trigger a conversation about a post-nuptial agreement.
Suggest it as an update to your pre-nuptial agreement. If you signed a pre-marital agreement, suggest that you and your spouse review it together to determine if it still seems fair and reasonable to both of you.
Discuss it while discussing other financial-planning essentials. Creating a will or engaging in estate or financial planning provide a nice segue into a discussion regarding post-nuptial agreements. Remember these agreements may be used as highly effective financial planning tools to protect your children’s inheritances or family businesses.
Have your attorney or family planner bring it up: A neutral adviser may ease the tension or emotional response that may arise out of a discussion concerning a post-nuptial agreement.

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

November 2, 2012

DIscussing Prenuptial Agreements with Your Future Spouse

Engagement and marriage is an exciting time for both parties in a relationship. However, one topic that relates to impending nuptials, the prenuptial agreement, is a topic that is delicate and often tricky to talk about. One never knows how their future spouse will respond. Will he or she agree that one is necessary? Or, will he or she be totally hostile to the idea? One thing is for sure, if you feel that a prenuptial agreement will be in your or your future spouse’s best interest, it is definitely wise to talk about it, early on. However, the big question is: How do you bring it up? Two recent articles addressed this issue: How (and Why) to Bring-up a Pre-Nup and Love and Money: How to Bring up a Prenup.

Why?

One question that many individuals think about when considering marriage is: Why do I need a prenuptial agreement? Also, this is likely to be one of the first questions your future spouse will ask when you bring up the topic. Fortunately, this question is relatively easy to answer. The primary purpose of prenuptial agreements (otherwise known as premarital or antenuptial agreements) is to determine the division of separate and marital property upon divorce. Some common reasons to obtain a premarital agreement are to protect premarital assets or property (property that is obtained by one spouse prior to the marriage, to ensure that any children from prior marriages or relationships are properly cared for in the event of one spouse’s death or divorce, to avoid lengthy and expensive property disputes in the event of a divorce, and to limit each spouses liability for the other spouses debt.

When?

Speaking with your future spouse about the possibility of a premarital agreement is something that should be done early on. Ideally, it should be done prior to or shortly after the engagement. Hopefully, this will ensure that both you and your partner will have a clear mind, and will not feel pressured by the prospect of an upcoming wedding date. In fact, one thing that you should never do is spring a proposed premarital agreement on your future spouse at the last minute. The reasons not to do so are abundant:

1. Springing a premarital agreement on your future spouse may cause him or her to baulk at the idea of signing it. This in turn may postpone any weeding plans the two of you have previously made.

2. Waiting until the last minute will not give your future spouse an appropriate amount of time to review the document and make any necessary changes. It is important for both you and your spouse to be independently represented. This means that you and your spouse should each have your own attorney. Being represented by your own attorney will ensure that you both are satisfied with the agreement you are entering.

3. Failing to ensure that your future spouse has adequately reviewed the agreement, totally understands his or her rights, and does not feel pressured into signing the agreement may lead to the agreement being dishonored by a court. See Blige v. Blige, 283 Ga. 65(2008) and Mallen v. Mallen, 280 Ga. 43(2005) (discussing the enforceability of premarital agreements in Georgia).

Where?

Although this may not initially come to mind, another issue that deserves consideration is where you should speak to you partner about entering into a premarital agreement. Location is key. You should chose somewhere private, and where both you and your future spouse feels comfortable and at ease. Discussing the topic of premarital agreements is already likely to be a contentious issue; there is no reason why your surroundings should be an added source of stress.

How?

As with any other discussion you would have with your partner, be open, honest, and direct. Discuss any concerns or issues you may have, and invite your partner to do the same. Frame the discussion in such a way to make your partner feel included. Try to assure your partner that entering into a premarital agreement is an endeavor that you two are entering into together, not just something that you are pushing him or her into. Answer all of your future spouse’s questions, and try to put their concerns to rest if at all possible.

Below are some sample discussion starters that may help you start your conversation:

“I believe that marriage is a fifty-fifty proposition, and I'm concerned about giving up my job to become a full-time stay at home spouse. Can we establish a principle of 50-50 sharing at the outset?"

"Let's talk about our future, what we both want, our lifestyles, our present and future finances. I want to make sure all our money issues are addressed and resolved in an agreement. Then we won't have them hanging over us when we get married."

"One thing I have to consider before I get married is my parents' business. I need to be confident that the business will remain in the family in the event the unthinkable occurs."

The Family Law attorneys at Meriwether & Tharp, LLC realize that discussing entering into a premarital agreement with your future spouse may not be the most pleasant task. However, once you and your partner have agreed to form one, we here at Meriwether & Tharp will be more than glad to help you and your partner draft the agreement that best serves your needs.

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

October 3, 2012

Our team of Atlanta divorce professionals gets big win from Georgia Supreme Court regarding enforcement of Premarital Agreement

On September 10, 2012, our Atlanta Divorce firm was pleased to find that we won a significant Georgia Supreme Court Case. The case of Fox v. Fox, Georgia Supreme Court Case Number S12A0672, was an interlocutory appeal, meaning that the Georgia Supreme Court took the case up before the trial court entered a final order. At issue in this case was whether the Court would enforce a “Premarital Agreement” that the parties signed prior to their marriage during their now pending divorce case. Atlanta Divorce Attorneys Patrick L. Meriwether and Melissa A. Tracy represented the party, in this case the husband, who did not want the agreement enforced.

At the trial court level, Attorneys Meriwether and Tracy were successful in convincing the court that the Agreement should not be enforced. The Wife’s counsel then requested and was granted the right to petition the Georgia Supreme Court to take up the case. Ultimately, the Georgia Supreme Court affirmed the trial court’s decision, holding that the “Premarital Agreement” was a contract in contemplation of marriage (and not divorce) and, as such, it was not properly attested by two witnesses as required by Georgia law.

This case should be a lesson to anyone considering a prenuptial agreement prior to marriage. The parties to the case did not seek the assistance of attorneys when creating the Agreement in question. Although not all prenuptial agreements will fail for the lack of following the strict two-witness requirement, a skilled family law attorney can ensure that your agreement is not subject to any pitfalls if it ever needs to be enforced during a divorce. If you are thinking about a prenuptial agreement, our team of Atlanta family law attorneys can help guide you through the process and ensure that your agreement complies with the law.

By Melissa Tracy, Associate Attorney, Meriwether & Tharp, LLC

September 10, 2012

What is the ramification of a Pre-marital agreement if there is no marriage?

As a practicing divorce lawyer in Atlanta, I belong to several websites where individuals can anonymously submit legal questions regarding all different practice areas. I do my best to be a regular contributor to some of these websites, giving people general information to help them with their situation. The answers are of a general nature and do not create an attorney-client relationship. I recently responded to an interesting question that I had not seen before on one of these websites.

The situation involved a young lady living in Atlanta who was raising a young son from a previous relationship. She was currently enrolled in college and working towards obtaining a degree to obtain gainful employment and to better her lot in life. She was involved in a relationship with a young man who was planning on moving to North Dakota presumably for an excellent job opportunity. She wanted to know if there was a ‘pre-marital’ agreement that she could enter into that would ensure that if the relationship fell apart after moving to North Dakota with him, she and her son would not be left penniless. Unfortunately, as I understood the question, the ‘pre-marital’ agreement did not contemplate an impending marriage.

Her question involved both a legal and practical answer. From a legal standpoint, her biggest problem was that she was not married to this young man. When it comes to individuals and providing some form of support, it is usually in the context of a marriage. Once there is a marriage, the Superior Courts of Georgia have what is called equitable power to enforce support agreements. Unfortunately, if the situation involves simply a contract between the Parties, the Court can only award a monetary judgment against one of the Parties. I can best illustrate the difficulties with this situation with the following hypothetical:

Let’s suppose these two Parties entered into agreement where, if Parties broke up, the boyfriend would pay the girlfriend $1,000 per month for eighteen months as well as pay her moving expenses back to Georgia. The agreement was drafted as an on-going ‘support’ obligation like many pre-marital agreements, but there was never a marriage. If she were to file a lawsuit, it would be under the principles of breach of contract and she could only sue for the damages that she incurred at the time she filed. If the boyfriend refused to pay his $1,000, the girlfriend would either have to wait the eighteen months or file a lawsuit each month for the $1,000 that he breaches. In most scenarios, she would have to hire an attorney to enforce this agreement due to the legal complications with contract law. In addition, depending on how the agreement was written, it could unenforceable because it is against public policy since it is outside of the scope of marriage.

The practical problem is that she would need money on an interim basis to live. She would not be able to afford to hire an attorney to file a lawsuit for the $18,000. Most lawsuits for breach of contract can last between six months to a year before you get to present your case to a Judge or jury. If she needs money to live on, she cannot wait until the end of the eighteen months to file a lawsuit for the $18,000 that he agreed to pay her. For all practical purposes, this type of “pre-marital agreement” is not a realistic option for her.

On the other hand, she would be in a much better financial situation if the Parties got married prior to moving to North Dakota and entered into a pre-marital agreement for support if they divorced. Courts in Georgia can hear domestic cases on a temporary basis and, often, you can get in front of a Judge for temporary relief between thirty and ninety days.

Using the same facts from the hypothetical above to a married situation, if the boyfriend and girlfriend divorced within months of moving to North Dakota, he could be forced to pay her the $1,000 per month. On a temporary basis, the Courts have the equitable power to force him to pay her the $1,000, and can garnish his wages for the $1,000 per month. If he refuses to pay after a Court Order is issued, the Court can hold him in criminal contempt and throw him in jail.

My final response to the question was that, in this situation, if she was in a serious relationship and was concerned about her financial situation if the relationship didn’t work out, she should consider getting married. If she was unsure of the relationship and its future, she should finish her degree and move with him when she received gainful employment. That way she would have the tools to take control of her life if things did not work out.

June 4, 2012

The continuing saga of enforcing a pre-nuptial agreement in Georgia

In the past, Georgia courts held that prenuptial agreements made in contemplation of divorce were invalid on the ground that they were contrary to public policy. Thankfully, this is no longer the case. See Scherer v. Scherer, 249 Ga. 635 (1982) overruling Reynolds v. Reynolds, 217 Ga. 234 (1961). Today, prenuptial agreements made in contemplation of divorce are regularly enforced by courts across the state. Though agreements in contemplation of divorce do not necessarily violate public policy, the distinction between agreements made in contemplation of divorce and agreements made in contemplation of marriage has continued.

Several recent cases have attempted to distinguish agreements made in contemplation of marriage from agreements made in contemplation of divorce. The former require attestation by two (2) witnesses under O.C.G.A. § 19-3-63, while the latter do not.

In Dove v. Dove, 285 Ga. 647, 647 (2009), the Court held that a prenuptial agreement settling alimony issues was a contract made in contemplation of divorce and only required the signature of one (1) witness. However, in Sullivan v. Sullivan, 268 Ga. 53 (2009), where an agreement set out property rights, defining each party’s respective estates without defining alimony or division of property in the event of divorce, the agreement was considered one made in contemplation of marriage and required the attestation of two (2) witnesses.

While O.C.G.A. § 19-3-63 requires that contracts made in contemplation of marriage must be attested to by at least two witnesses, this statute does not apply to prenuptial agreements made in contemplation of divorce. Lawrence v. Lawrence, 286 Ga. 309 (2009). In Lawrence, the trial court upheld a prenuptial agreement that was only witnessed by one person. The Wife appealed, claiming that O.C.G.A. § 19-3-63 required the signatures of two witnesses. The Supreme Court of Georgia affirmed the trial court’s decision and stated that an agreement that contemplates that the marriage may end by divorce or dissolution, rather than only death, is an agreement that is made in contemplation of divorce, not marriage. Lawrence at 311-312.

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

June 1, 2012

Enforceability of a prenuptial agreement in Georgia

In Georgia, for a prenuptial agreement to be deemed enforceable it must pass a three-part test set forth in Scherer v. Scherer, 249 Ga. 635 (1982). This three-part test, as restated in Blige v. Blige, 283 Ga. 65, 67 (2008), reads as follows:

"[T]he party seeking enforcement bears the burden of proof to demonstrate that: (1) the antenuptial agreement was not the result of fraud, duress, mistake, misrepresentation, or nondisclosure of material facts; (2) the agreement is not unconscionable; and (3) taking into account all relevant facts and circumstances, including changes beyond the parties’ contemplation when the agreement was executed, enforcement of the antenuptial agreement would be neither unfair nor unreasonable."

The party seeking to enforce the pre-nupt carries the burden of demonstrating the above mentioned factors.

Under Adams v. Adams, 278 Ga. 521 (2004), to satisfy the first prong of the Scherer test, the enforcing party must show “a full and fair disclosure of the assets of the parties prior to the execution of the [antenuptial] agreement.” Courts have held that a failure to disclose yearly income may amount to the nondisclosure of a material fact. To avoid such problems courts have endorsed financial statements and statements of income as “the most effective method[s] of satisfying the . . . disclosure obligation in most circumstances.” Blige at 69, n.12.

Satisfying the second and third prongs of the Scherer test requires that the party seeking to enforce the pre-nup demonstrate that the agreement is not clearly unconscionable and that its enforcement would not be unfair.

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

December 26, 2011

Prenuptial agreement upheld in Georgia divorce case

The Supreme Court of Georgia recently heard an appeal of a divorce case, which highlights the security, or risk (depending on which side you are on), of entering into a prenuptial agreement in Georgia. Sides v. Sides, S11F1140 (2011). In that case, the parties began dating in 1989 and, shortly thereafter, the Wife became pregnant. Id. Due to the great disparity in assets and income between the parties, they negotiated and signed a prenuptial agreement before marrying in 1990. Id. Under the agreement, “Wife would have been entitled to substantially more resources if the parties divorced after their twenty-year anniversary, and substantially less if the parties divorced prior to their twenty year anniversary.” Id. at 2. Nearly twenty years later, the Husband filed a Compliant for Divorce and Motion to Enforce the Prenuptial Agreement, which the trial court granted a mere 62 days prior to the couple’s twenty year anniversary, and the WIfe appealed. Id.

The Supreme Court of Georgia affirmed the enforcement of the prenuptial agreement. The Court first laid out the factors to be considered by the trial court in deciding the validity of the prenuptial agreement: “(1) [W]as the agreement obtained through fraud, duress or mistake, or through misrepresentation or nondisclosure of material facts? (2) [I]s the agreement unconscionable? (3) Have the facts and circumstances changed since the agreement was executed, so as to make its enforcement unfair and unreasonable?” Id., quoting Scherer v. Scherer, 249 Ga. 635, 641 (3) (1982).

In this case, both attorneys “deposed that they would not have allowed their clients to enter the agreement without full financial disclosures being made,” and Wife was long aware of the “vast disparity” between their incomes. Id. at 3. Thus, the evidence supported that full financial disclosures were made prior to signing and the agreement was not unconscionable. In addition, the increase in Husband’s net worth was anticipated and, therefore, it was not a “change of circumstance that would make the enforcement of the agreement unfair and unreasonable.” Id. at 4. The trial court, thus, did not abuse its discretion in upholding the prenuptial agreement.

October 15, 2010

An Atlanta Divorce Attorney's Thoughts on Celebrity Divorce - Owner of Los Angeles Dodgers

In this weekly installment of An Atlanta Divorce Attorney’s Thoughts on Celebrity Divorce, I will discuss the ongoing divorce action of the owner of the Los Angeles Dodgers. As you may have read in the New York Times or other news outlets, the owner of the Los Angeles Dodgers is going through a divorce, putting ownership of the Major League Baseball team in dispute. The key to this case is a post-nuptial agreement, of which there are two versions – one version gives the team to the husband/owner and the other version makes the parties joint owners of the team. The owner’s wife is asking that the agreement be thrown out and is alleging that the version giving complete ownership of the team to her husband was obtained fraudulently. If the agreement is thrown out, the team will be divided with the parties’ other assets under California’s community property law.

If this case was in Georgia and the agreement was invalidated, the team would be equitably divided. As explained in detail in previous blogs, equitable division does not necessarily mean equal. The judge would consider all the circumstances in deciding how (or if) to divide the team. Thus, the outcome of the case could be much different in Georgia than in it would be in California, where the parties would each receive 50% of the team. Closing arguments were recently completed and the judge now has 90 days to decide the fate of the parties and the Los Angeles Dodgers. It will be interesting to see how this one turns out.

May 4, 2009

Georgia Prenuptial Agreements

Prenuptial contracts, or antenuptial agreements, are made to protect you in case of divorce and are not just for those with substantial assets. There has been a renewed interest in prenups recently because many people want to protect the financial security he/she built prior to the marriage. It can also rule out alimony ahead of time as well as liability for your soon-to-be spouse’s debt. It is a good idea to use a prenup as a way to discuss the important financial topics before you get married, including each of your financial expectations for what the other will be responsible for, such as substantial pre marital debt, keeping a family business separate property, retirement accrued before the marriage and after or even to preclude alimony ahead of time.

Keep the following in mind:

• You should leave at least 6-12 months before your wedding to talk about and agree to the terms of the prenup which can be thrown out if it is entered into too close to the wedding date.

• Contrary to what some believe, prenups are enforceable in Georgia. Be careful though, because each state can be different. What is okay in Georgia may not be the case in another state.

• You should have an attorney for each party, but in case you do not, the attorney drafting the prenup can only represent and give legal advice to one party. The unrepresented party will have to sign an acknowledgement stating the refusal of representation. Also, each person should pay for his/her attorney.

• You will need to attach an itemized statement or spreadsheet of the assets and debts you want to include in the prenup for each person. This is important because there must be a full disclosure of assets for a valid prenup.

• If you have assets prior to the marriage (retirement, stocks, house, etc), the balance or value prior to the marriage is considered separate property. It is a good idea to have statements and/or appraisals done just prior to the wedding date to set the premarital value.

• If you have substantial liquid assets, consider keeping what you already have prior to the marriage in a separate account with only your name on it. Keep in mind that when you shift money from your separate account into a joint account, you are likely “gifting” that money into the marriage.

March 10, 2009

Pre-nuptial Agreements in Georgia

An ante-nuptial agreement (commonly referred to as a pre-nuptial agreement or “pre-nup”, according to O.C.G.A. § 19-3-62, is a contract into which a couple enters prior to marriage, which divides his or her assets in case the couple’s marriage ends in divorce. Many people usually associate pre-nups with the rich and famous or the wealthy, but anyone can obtain a pre-nup in Georgia regardless of their wealth and assets. Typically, each party will keep the assets that he or she had prior to the marriage and the division of assets is detailed in the pre-nup. One party usually keeps all of their money and assets that he or she had prior to the marriage and the other party keeps theirs. It basically says what is mine is mine and what is yours is yours. Also, if the marriage does end in divorce, the pre-nup will detail what (if any) alimony or assets the other spouse is entitled to receive.

The only enforceable clauses in a pre-nup deal with the parties’ assets. Recently, family law attorneys throughout the country have seen a new trend in pre-nups. Couples now want to add health-related clauses, such as how much weight his or her spouse can gain during the marriage or when they will have their first child. For instance, a man may want to add a clause that states his wife is only allowed to gain a certain number of pounds during their marriage and if she gains any more than the allotted amount, then she will be subject to monetary penalties. Not only are clauses like this unusual (to say the least), but health related clauses are not enforceable in the State of Georgia. The only clauses in pre-nups that are enforceable in Georgia are the ones dealing with money and/or assets of the parties.