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Case Law Update, July 10, 2017

Posted By By Audrey B. Bergeson, Esq., Monday, July 10, 2017

Gibson v. Gibson

2017 Ga. LEXIS 455

June 5, 2017

 

On appeal arising from a divorce action, the wife argued that the trial court improperly excluded $3.2 million in assets from its determination of equitable division of the assets. The Supreme Court affirmed the decision of the trial court to exclude the assets in trust from equitable division, except as to certain brokerage accounts not properly conveyed to the trust.

 

The evidence at trial showed that the relationship of the parties had been rocky for at least half of the twenty years they were married. While the wife threatened divorce often over those ten years, the husband testified that he did not take such threats seriously until the wife did in fact file for divorce in 2014.

 

Several years prior to the wife filing for divorce, in 2008, the husband formed a trust for the benefit of the wife and their daughter, named his mother as trustee, and transferred certain assets to the trust.  The husband created another similar trust in 2012. It was undisputed at trial that the wife was unaware of the trusts or the transfer of assets to the same.

 

The Supreme Court found that the trust would be subject to equitable division only if the wife could show that the transfers were fraudulent. Property conveyed to a third party is not subject to equitable division absent a showing of fraud. An exception does exist if a spouse places property in a trust of which he is the sole beneficiary, in which case the property may be subject to division. However, this exception did not apply here as the husband was not a beneficiary of the trust at all. The Supreme Court held that the trial court’s determination that the transfer was not fraudulent was supported by the evidence. Thus, finding no fraudulent transfer, the trial court was correct in excluding these assets from equitable division.

 

Lastly, two brokerage accounts held by the trust, which the husband had conveyed to the trust, named the husband as trustee. While, the husband presented evidence that this was administrative error and his intent was to transfer these assets to the trust, the Supreme Court was unpersuaded by the husband’s intent argument. Rather, the Court held that the assets had not been properly conveyed and were therefore subject to division, regardless of the husband’s intent to transfer. The Supreme Court remanded with direction for the trial court to reconsider equitable division to include these accounts.

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