Georgia, like most other states, is an equitable distribution state. This rule has two components. First, all property in a divorce, including debts and assets, must be divided equitably. In Cobb County family courts, equitably is usually, but not always, the same as equally. Furthermore, the divorce cannot be an unfair financial burden on either spouse. Divorce is a financial burden. There’s no two ways about it. But the ex-spouses must share that burden equally.
Because this rule is so vague, most couples at least consider signing a premarital agreement, especially if one or both spouses has been married before. Georgia lawmakers haven’t adopted the UPAA (Uniform Premarital Agreement Act), a multistate law that controls matters like the making and breaking of prenuptial agreements. However, Georgia lawmakers have recently streamlined this process. More on that below.
In equitable distribution states like Georgia, both spouses have important legal and financial rights. So, both spouses need a strong-willed Marietta family law attorney who stands up for those legal rights. This representation is important because, in most cases, property division is a one-time affair. These divisions usually cannot be reconsidered or modified.
Prenuptial Agreements
These contracts allow the spouses to decide, in advance, how to divide or retain property in the event of a divorce. The agreement may also state whether one spouse will pay the other alimony if the marriage ends.
A prenuptial agreement also separates marital from nonmarital property. Typically, a prenuptial agreement lists what each person owns and owes at the time of the marriage, so there’s no argument about it years later. The parties may jointly agree to amend a prenup if circumstances change.
The agreement may also determine how the couple will divide property and income that they accumulate during the marriage. Commonly, spouses agree that each one automatically keeps the car they drive most often if the marriage ends, or that each spouse keeps their own business interests, retirement accounts, and personal credit card debts.
A prenuptial agreement cannot, however, take away a spouse’s responsibility to pay the debts they have at the date of the marriage itself.
Upon divorce, the judge must rule on enforceability issues. The judge could invalidate all or part of the agreement if:
- A spouse obtained the agreement through fraud, duress, or mistake,
- A spouse misrepresented or refused to disclose material facts,
- The agreement is unconscionable (so one-sided that the court cannot enforce it), or
- The couple’s circumstances have changed since the agreement, making its enforcement unfair and unreasonable.
As a rule of thumb, if each spouse had an independent Marietta family law attorney throughout the process, the judge would probably uphold the agreement, even if its terms are one-sided or the circumstances surrounding its signing were a little shady.
An “Independent” lawyer usually means the spouse was the client, and that same spouse was financially responsible for legal fees.
Classifying Assets
Recent state law changes made prenuptial agreements easier to draft and enforce. But they didn’t affect the underlying marital/nonmarital property rule. Assets or debts acquired before the marriage or by gift are nonmarital property and everything else is marital property.
That principle sounds simple. But, as they say, the devil is in the details. The average marriage which ends in divorce lasts a little over seven years. During that time, assets and debts become commingled, blurring the line between marital and nonmarital property.
Assume Raul bought a rent house before he married Maria. The rent house was vacant and in danger of being shut down due to multiple code violations. Maria, who owns a construction contracting company, brings the house up to code. As a result, Raul rents the house and it remains perpetually occupied.
If Raul and Maria divorce, and if they don’t have a premarital agreement that resolves the issue, the house might be Raul’s nonmarital property, Maria’s nonmarital property, or marital property subject to equitable division. Likewise, all future rents might fall into any one of these three categories.
If Raul used a note to buy the house, the situation is even more complex. Most likely, he would remain financially responsible for the note, no matter who owns the house and is entitled to the income. If a court awards the house to Maria or orders them to divide the house, Raul is in a bind, to say the least. In such a situation, a Marietta family law attorney could argue that Maria is unjustly enriched (she gets something for nothing), an argument that opens a new can of worms.
Speaking of dividing the asset, an immediate sale and equitable division may not be in the best financial interests of the parties. If the market is down, Raul and Maria might decide to hold onto the house until the market swings back up.
Frequently, a Marietta family law attorney partners with a real estate appraiser or other such professional in these matters. A real estate appraiser or agent can accurately estimate a home’s current market value, which may be different from its fair market value. Values dip in a buyer’s market and increase in a seller’s market.
If Raul and Maria delay the sale, and the judge approves, the decree must designate one spouse as the trustee. Once again, that designation opens a can of worms. Furthermore, Raul and Maria must take steps to lock in their share of the equity, if any.
Dividing Assets
Once the classification quagmire is solved, the remainder of the process is often downhill. The property division must equitably divide assets according to a number of factors, such as:
- Length of the marriage,
- Nonmarital property awards,
- Future earning capacity of each spouse,
- Economic and noneconomic contributions to the marriage,
- Custody of minor children, and
- Agreements between the parties (including prenups and informal agreements).
Marital property awards don’t occur in a vacuum. Frequently, a Marietta family law attorney negotiates an offset. For example, Maria might agree to accept more spousal support if she allows Raul to keep a larger share of a 401(k).
Property division is usually the most time-consuming portion of a divorce. For a free consultation with an experienced Marietta family lawyer, contact The Phillips Law Firm, LLC. Convenient payment plans are available.
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