Alina Gibson (Wife) appeals from the trial court’s order granting her requested divorce from Stewart Gibson (Husband). She argues that the trial court erred by excluding from the marital estate approximately $3.2 million in assets that Husband previously had placed into two trusts. Wife argues that exclusion of the trust assets was erroneous because (1) property placed in trust by one spouse without the other’s knowledge and consent remains marital property; (2) Husband’s transfer of assets into the trusts was fraudulent; and (3) Husband failed to transfer properly the assets in question into the trusts. Contrary to Wife’s argument, trusts like those here are exempt from equitable division absent a finding of fraud. Because the trial court’s finding that Husband’s transfers of assets into the trusts were not fraudulent is supported by evidence in the record, we affirm the trial court’s rejection of Wife’s fraudulent transfer claim. Wife’s other claims are unavailing, as well, with one exception: we agree with her that transfers of the contents of two brokerage accounts into the trusts were ineffective under OCGA § 53-12-25 (a) because the accounts erroneously listed Husband as trustee. We therefore remand for the trial court to redistribute the marital assets, including the assets in those two accounts.
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
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.
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 identification numbers on the accounts. Wife filed an application for discretionary appeal, which we granted.
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,
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 fraudulen t.
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.
This is not an issue of first impression for our Court, which has permitted property placed in certain types of trusts to be exempt from equitable division. “The law of contracts and titles is respected in divorce cases .’’ Armour v. Holcombe,
Here, Husband is not a beneficiary of the Trusts at all. He is not a trustee of the Trusts. Therefore, for equitable division purposes, the transfers of property to the Trusts were the equivalent of transfers to a third party, such that the property is subject to equitable division only if Wife can show that the transfers were fraudulent.
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 “confidential relationship” between spouses, saying this means that Husband’s failure to tell her about the transfers made those transfers fraudulent as a matter of law. See Murray v. Murray,
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,
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 evidence that the parties did not maintain joint financial accounts or share their “personal financial information,” although Husband made regular contributions to certain household expenses. The court also cited the parties’ lack of physical intimacy and failure to share a bedroom in the later years of their marriage. But our previous conclusions about the confidential relationship of marriage have not turned on these sorts of case-by-case considerations. The trial court erred in its analysis in this regard.
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,
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,
At the time of the transactions at issue in this case, Georgia’s Uniform Fraudulent Transfers Act (“UFTA”) provided at OCGA § 18-2-74 (a) (1) that
[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.” OCGA § 18-2-71 (3), (4), (6) (2003). And we have indicated that a predecessor statute was implicated by questions of whether a husband’s transfer of property was done with intent to delay or defraud his wife in her collection of alimony. See Lewis v. Lewis,
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 OCGA § 18-2-74 (b), which provided a non-exclusive list of factors, or “badges of fraud” that might be considered in determining the existence of actual intent to defraud under the former UFTA. The trial court made factual findings to the effect that several of these factors weighed against concluding that Husband intended to defraud Wife, finding that Husband did not actively conceal the transfers from Wife, did not retain possession or control of the assets transferred, did not transfer substantially all of his assets or become insolvent after the transfers, and did not abscond. There is evidence to support these findings, and they are sufficient to support the trial court’s ultimate conclusion that the creation and funding of the Trusts was not fraudulent.
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.
(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; and (3) OCGA § 44-5-80, which requires that all valid inter vivos gifts be delivered and accepted. Pretermitting Husband’s argument that the trustee’s lack of awareness of the contributions to the Trusts was irrelevant, Wife’s argument fails because the trial court clearly did not credit the testimonyby Julia Gibson on which Wife relies. Rather, the trial court said that Julia Gibson’s deposition testimony, read into the record at trial, was “replete with examples of [her] obvious forgetfulness.” For instance, the trial court noted that Julia Gibson testified that she did not from time to time receive documents in the mail related to the SLG Trust, then promptly said that she did receive them and did sign them. The trial court did credit the testimony of Galat to the effect that Julia Gibson was aware of and approved certain contributions into the SLG Trust. The trial court’s factual finding consistent with that testimony is not clearly erroneous. Wife therefore cannot seek reversal on the basis that Julia Gibson never knew of, and thus did not accept, any contributions into the Trusts.
(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 OCGA § 53-12-25 (a), which provides that“[t]ransfer of property to a trust shall require a transfer of legal title to the trustee.” We agree with Wife on this point.
Two Charles Schwab accounts purportedly held in the Trusts bore the name of Husband as trustee.
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, OCGA § 53-12-25 (a) means thatabrokerage account should bear the name of the trustee in order to be held in trust. Rather, Husband argues that the statute does not apply to him because he is a living person, he did not self-settle the Trusts, and his intent to convey the assets to the Trusts is clear. But this argument must yield to the plain language of the statute. When construing a statute, we
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,
Husband points to a Georgia trusts treatise as support for his argument that OCGA § 53-12-25 (a) does not render irrelevant evidence of a settlor’s intent. According to the treatise, the intent of the committee that drafted OCGA § 53-12-25 (a) was to avoid confusion following a settlor’s death as to which property was held by the settlor as an individual and which property was held by the settlor as trustee of a self-settled trust. See Mary F. Radford, Georgia Trusts and, Trustees § 2:4 (Dec. 2016 update). Because there need not be any confusion regarding a living settlor’s intent to gift property to a trust, Husband argues, OCGA § 53-12-25 (a) does not render a living settlor’s intent irrelevant. Husband also cites the same treatise for the notion that the committee that drafted OCGA § 53-12-25 (a) found relevant that other Georgia statutes require actual delivery of property to effectuate a gift, as proof of the donor’s intent. Radford, supra, § 2:4. But “the legislature’s intent is discerned from the text of a duly enacted statute and the statute’s context within the larger legal framework.” State v. Riggs,
[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.
Merritt v. State,
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. SeealsoOCGA § 19-5-7 (“After a petition for divorce has been filed, no transfer of property by either party, except a bona fide transfer in payment of preexisting debts, shall pass title so as to avoid the vesting thereof according to the final verdict of the jury in the case ...Therefore, the trial court erred by failing to include the assets placed in the Schwab accounts in 2012 in its equitable division of property between the parties.
The trial court ruled that even if OCGA § 53-12-25 “applie[d]” to the transfers into the Trusts generally, it did not apply to a May 2010 purported transfer, because that occurred prior to the July 1, 2010 effective date of the statute. The court relied on Rose v. Waldrip,
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.” OCGA § 53-12-1 (b). The Georgia Constitution also forbids passage of retroactive laws that injure vested rights. See Rose,
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 “trustee” as “the person holding
Judgment affirmed in part and vacated in part, and case remanded.
Notes
Husband’s mother was named as a party to the divorce case as the trustee, but Dr. Robert Kaufmann was later substituted for the mother after he replaced her as the trustee of the Trusts.
Wife’s application was filed on June 3, 2016. Under the Appellate Jurisdiction Reform Act of 2016, Ga. L. 2016, p. 883, the Court of Appeals was given subject matter jurisdiction over “[a]ll divorce and alimony cases” in which a notice of appeal or application to appeal is filed on or after January 1, 2017. Id. at pp. 885-886, §§ 3-1 (codified at OCGA § 15-3-3.1 (a) (5)), 6-1 (c) (effective date). Thus, appeals in future cases of this sort will go to the Court of Appeals instead of this Court. See Dallow v. Dallow,
Wife cites Pina v. Pina,
Wife cites to several cases from foreign jurisdictions to support her claim that trust assets may be considered marital property subject to equitable division, but those cases are not persuasive authority for the notion that the corpus of a trust always must be converted into marital property. In Janosek v. Janosek,
Miller was an appeal from a grant of summary judgment, and thus the question of deference to the trial court’s factual findings did not arise.
The UFTA was amended in 2014 and was renamed the Uniform Voidable Transactions Act. The sole change to the quoted subsection was that the legislature substituted “voidable” for the word “fraudulent.” Ga. L. 2015, pp. 996, 1022, § 4A-1.
Although Galat acknowledged that a document purported to show that Husband previously had assigned 99 percent limited partnership interest in Gibson Partners to the Gibson Family Trust, Galat maintained that he had reviewed other documentation and “every single thing he showed me showed that he was still the owner of the asset.” Husband also testified that he owned Gibson Partners.
In addition we note authority to the effect that where, as here, a trust is named as a beneficiary of a life insurance policy, that is sufficient for the creation of a trust. See Mary F. Radford, Georgia Trusts and Trustees § 2:4 (Dec. 2016 update) (citing OCGA § 53-12-2 (15), which defines “[t]rust property” to include “a contractual right to receive death benefits as the designated beneficiary under a policy of insurance”).
On a trust account application for one account, it appears that Julia Gibson is listed as a co-trustee along with Husband, but her name is scratched out, a change initialed by Husband.
The irrelevance of such considerations is even more obvious when, as here, the subjective “intent” we are asked to consider is not even that of the General Assembly. According to the cited treatise, the committee to which the treatise refers is a State Bar of Georgia Fiduciary Law Section committee, not a legislative committee. See Radford, supra, Preliminary Materials.
This definition was found in the former Trust Code at OCGA § 53-12-2 (11). It was carried over with a slight revision to the new Trust Code at OCGA § 53-12-2 (16).