GIBSON v. GIBSON et al.
S17F0593
Supreme Court of Georgia
June 5, 2017
Reconsideration denied June 30, 2017
301 Ga. 622
PETERSON, Justice.
FINAL COPY; Domestic relations. Fulton Superior Court. Before Judge Markle.
Husband and Wife were married in 1993 and had one child, born in 2004. Husband and Wife had a rocky marriage and began sleeping separately following their daughter‘s birth. Husband testified that, although Wife threatened to divorce him many times, he never took her threats seriously and did not consider them to be separated until she actually filed for divorce in 2014.
This litigation concerns two trusts created by Husband. In March 2008, Husband created an irrevocable trust, the Gibson Family Trust (the “GF Trust“), naming his mother, Julia Gibson, as trustee and Wife, their daughter, and their daughter‘s descendants as beneficiaries. The terms of the trust gave the trustee the discretion to distribute income and principal to Wife and their daughter during Husband‘s life and in the event of his death, and stripped Wife of her rights and interests in the trust if Husband and Wife divorced or legally separated. The trust also provided certain rights of withdrawal to the Gibsons’ child or her legal guardian. In July 2012, Husband created a second irrevocable
Wife filed for divorce in July 2014. In her petition, as amended, Wife raised a conversion claim against Husband and fraudulent transfer claims against Husband and the trustee of the Trusts.1 Wife claimed that the conveyances to the Trusts were fraudulent because they were made with the intent to hinder, delay, or defraud Wife in the event of divorce. At the six-day bench trial, Husband testified that the GF Trust was set up for liability protection purposes and for the benefit of his daughter. Husband testified that he and Wife never discussed financial matters. The undisputed trial testimony was that Wife did
Following the trial, the trial court found that $2.2 million in assets was marital property subject to equitable distribution. The court involuntarily dismissed Wife‘s fraudulent transfer and conversion claims, denying her request that the additional $3.2 million in assets placed in the two Trusts be subjected to equitable division. The trial court found that Husband and Wife did not have a confidential relationship because they did not maintain joint financial accounts or share financial information. The court found that Husband did not form or fund the Trusts at a time when he knew Wife was contemplating divorce or with actual intent to defraud her, that he did not actively conceal the transfers from Wife, and he delivered dominion and control of the assets to the trustee before Wife filed for divorce. The court also found that, although two Charles Schwab accounts purportedly in the Trusts listed Husband as trustee, this was due to the brokerage firm‘s administrative error, and Husband demonstrated his intention to convey the assets to the Trusts because he listed the Trusts’ federal tax
In reviewing a bench trial, we view the evidence in the light most favorable to the trial court‘s rulings, defer to the trial court‘s credibility judgments, and will not set aside the trial court‘s factual findings unless they are clearly erroneous. McDonald v. McDonald, 289 Ga. 387, 387 (1) (711 SE2d 679) (2011); Bloomfield v. Bloomfield, 282 Ga. 108, 108 (646 SE2d 207) (2007). “It is a question of law for the court whether a particular category of property may legally constitute a marital or non-marital asset, but whether a particular item of property actually is a marital or non-marital asset may be a question of fact for the trier of fact.” Highsmith v. Highsmith, 289 Ga. 841, 842 (1) (716 SE2d 146) (2011) (citation and punctuation omitted); see also Bloomfield, 282 Ga. at 108 (1) (factual finding as to whether a particular item is marital or non-marital property must be upheld if supported by any evidence).
Wife argues that the trial court erred in failing to classify the trust assets as marital assets, contending that the assets are subject to equitable distribution irrespective of any fraud on the part of Husband. She also argues that Husband‘s actions amounted to fraud as a matter of law. As an alternative basis for reversal, Wife argues that for a host of reasons Husband did not legally deliver the assets to the trustee before Wife filed for divorce.
1. Property in the Trusts is subject to equitable division only if Wife can show that the transfers into the Trusts were fraudulent.
Wife first argues that, irrespective of Husband‘s motives, the property in the Trusts are marital property because he placed the property in trust during the marriage without her knowledge and consent. Saying the matter is an issue of first impression for this Court, Wife cites decisions from other states for the proposition that other jurisdictions routinely construe marital assets placed in trust as marital property subject to equitable division in a divorce proceeding.
2. The trial court‘s rejection of Wife‘s fraudulent transfer claim is supported by evidence in the record.
To that end, Wife argues that Husband‘s actions in placing the assets in question in trust amounted to fraud. She relies on our case law emphasizing the
Any relationship shall be deemed confidential, whether arising from nature, created by law, or resulting from contracts, where one party is so situated as to exercise a controlling influence over the will, conduct, and interest of another or where, from a similar relationship of mutual confidence, the law requires the utmost good faith, such as the relationship between partners, principal and agent, etc.
See Murray, 299 Ga. at 705; Beller, 275 Ga. at 762 (3). And we reaffirmed just last year that “spouses enjoy a confidential relationship entitling one to repose confidence and trust in the other.” Murray, 299 Ga. at 705 (citation and punctuation omitted).
The trial court relied on evidence of the particular circumstances of the parties’ rocky marriage to conclude that they “were not in a confidential relationship as to their respective financial circumstances.” The trial court cited
But this error does not warrant reversal. To say that spouses generally enjoy a confidential relationship that entitles one to trust the other does not answer the question of what exactly one spouse is required to disclose to the other. We have cited the presumption of trust between spouses for the unremarkable conclusion that when a wife sues her husband for giving her genital herpes, his untruthful statements as to his health amount to fraud that tolls the statute of limitations. See Beller, 275 Ga. at 762-763 (2)-(3) (affirming award of damages on personal injury claim filed in connection with divorce). And we have held that when a spouse affirmatively seeks the other‘s agreement on a matter related to the termination of their marriage, he must do so with candor. See Murray, 299 Ga. at 705 (evidence supported trial court‘s conclusion
Of course, this case is not about a $50 charitable contribution. The size and circumstances of the financial transactions at issue here could give rise to some suggestion of fraud. For example, our Court of Appeals has concluded that a husband‘s execution of a settlement agreement in contemplation of divorce created a question of fraud for a jury when the agreement required him to pay his wife $125,000 as an equitable division of marital property, execute a will in which he designated certain people beneficiaries, and not make any gift that would substantially reduce his estate, and yet just a week prior to execution of agreement he had given his future wife $472,000. See Miller v. Lomax, 266 Ga. App. 93, 96-98 (2) (b) (596 SE2d 232) (2004).5
At the time of the transactions at issue in this case, Georgia‘s Uniform Fraudulent Transfers Act (“UFTA“) provided at
[a] transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor‘s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation . . . [w]ith actual intent to hinder, delay, or defraud any creditor of the debtor[.]6
Key terms in this provision were broadly defined: a “creditor” was defined as “a person who has a claim,” a “debtor” meant “a person who is liable on a claim,” and a “claim” was “a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.”
The trial court determined after a lengthy bench trial that Husband‘s transfers of property to the Trusts were not fraudulent. The trial court properly cited
3. Wife‘s arguments that the transfers to the Trusts were invalid are unavailing, with the exception of her argument that transfers of assets held in the Charles Schwab accounts were incomplete under OCGA § 53-12-25 (a) .
Wife also raises various other arguments that the transfers to the trust were not legally effectuated.
(a) First, Wife argues that the trial court erred in validating Husband‘s purported transfer of an insurance policy and an interest in S. Gibson Properties, LLC to the SLG Trust. She argues that this was error because both the insurance policy and the interest in S. Gibson Properties were actually owned by Gibson Partners, L.P., and the transfer documents did not indicate that Husband was executing them in any representative capacity. She correctly points out that a person cannot convey good title to that which she does not own. See Smith v. Hooker/Barnes, Inc., 253 Ga. 514, 514 (1) (322 SE2d 268) (1984). But Husband‘s estate-planning attorney, Bryan Galat, testified that Gibson Partners was owned entirely by Husband — 99 percent personally, and 1 percent
(b) Next, Wife argues that the trial court erred in concluding that all of Husband‘s transfers to the Trusts were complete despite Julia Gibson‘s testimony that she did not learn about any of the accounts or assets in the Trusts until Wife filed for divorce. Wife contends that this evidence means the transfers run afoul of (1) the trust instruments’ express terms limiting additions to trust property to those the trustee accepts and approves; (2) Georgia law requiring that property be conveyed to a trustee in order to be placed in trust;
(c) Finally, Wife argues that the trial court erred by finding that Husband‘s intent to transfer $1.3 million held in accounts titled in Husband‘s name as trustee of the Trusts sufficed to satisfy the requirements of
Two Charles Schwab accounts purportedly held in the Trusts bore the name of Husband as trustee.9 Rejecting Wife‘s argument that this fact rendered the purported transfer of the contents of the accounts to the Trusts ineffective under
The language of the statute is plain, however, that legal title must be transferred to the trustee. Our Trust Code does not define precisely what it means to “transfer” “legal title” to a brokerage account or its contents. But Husband does not dispute that, as a general matter,
presume that the General Assembly meant what it said and said what it meant. To that end, we must afford the statutory text its plain and ordinary meaning, we must view the statutory text in the context in which it appears, and we must read the statutory text in its most natural and reasonable way, as an ordinary speaker of the English language would.
Deal v. Coleman, 294 Ga. 170, 172-173 (1) (a) (751 SE2d 337) (2013) (citations and punctuation omitted). “[I]f the statutory text is clear and unambiguous, we attribute to the statute its plain meaning, and our search for statutory meaning is at an end.” Id. at 173 (1) (a) (citation and punctuation omitted).
Husband points to a Georgia trusts treatise as support for his argument that
[W]hen judges start discussing not the meaning of the statutes the legislature actually enacted, as determined from the text of those laws, but rather the unexpressed “spirit” or “reason” of the legislation, and the need to make sure the law does not cause unreasonable consequences, we venture into dangerously undemocratic, unfair, and impractical territory.
Husband also argues that evidence of his intent to transfer to the Trusts title to the assets in the brokerage accounts distinguishes his situation from a Court of Appeals of Georgia decision that relied on
The trial court‘s attempt to salvage the incomplete transfers of the assets in the Schwab accounts to the Trusts is unavailing. The trial court said that the names on the accounts could be changed after the divorce proceeding was concluded. But, as Wife points out, once those proceedings began, it was too late for Husband to put assets in trust and thereby exempt them from equitable division. Wife‘s initiation of the proceedings in July 2014 subjected the parties to a standing trial court order that prohibited the dissipation of marital assets except in the ordinary course of business. See also
The trial court ruled that even if
As explained in Rose, the Trust Code as revised in 2010 expressly applies to any trust regardless of the date created, subject to two exceptions: (1) “to the extent [application of the Revised Code] would impair vested rights” and (2) “except as otherwise provided by law.”
We conclude that it did, at least in the case of a settlor, like Husband, who did not name himself as trustee. The Trust Code in May 2010 defined a
Judgment affirmed in part and vacated in part, and case remanded.
PETERSON, JUSTICE
Decided June 5, 2017 – Reconsideration denied June 30, 2017.
Domestic relations. Fulton Superior Court. Before Judge Markle.
Barbara E. Keon; Gaslowitz Frankel, Craig M. Frankel, for appellant.
Boyd Collar Nolen & Tuggle, Robert D. Boyd, Kevin J. Rubin; King & Spalding, Letitia A. McDonald, Emily S. Newton, for appellees.