“I’m Taking Half” by Danielle Marotti

 

A key component of the divorce process is figuring out which spouse keeps what.  There’s a common misconception that if parties are getting divorced, then they are each entitled to half of the marital estate. In reality, this is not the case.  Instead, Georgia is an equitable distribution state. This means that the Court divides the marital estate based on what is considered to be just, fair, and equitable instead of taking a knife and slicing the marital estate equally in half. This is not to say that the marital estate may not be divided in half. In certain instances, half may be what is fair.

Because the property division is based on what the Court finds to be equitable, the Court can look at a number of factors in deciding the division of the marital estate. To name a few, the Court could consider the following:

  1. Conduct of the parties;
  2. Contributions to the marriage – both financial and at home;
  3. Intent of the parties regarding a specific asset; and
  4. Length of the marriage

Therefore, for example, if one party had an affair during the marriage which led to the divorce, then this could impact the Court’s decision when dividing the marital estate. In addition, the Court is not going to punish one party for putting their time and energy into upkeeping the home and raising the children while the other contributed more to the marriage financially. Both are looked at as contributions that will be considered by the Court.

The Court cannot just divide any and all property owned by the parties. The Court may only divide property that is considered marital. Marital property is “that which is acquired as a direct result of the labor and investments of the parties during the marriage.” Hipps v. Hipps, 278 Ga. 49 (2004). This can include but is not limited to retirement benefits, real property, employment earnings, investment accounts, vehicles, and businesses. The trier of fact in a divorce proceeding will need to review the evidence and decide which assets it considers to be marital and which it considers to be non-marital/separate. While the Court is not going to divide separate property and award it to the other spouse, it can consider the separate property when deciding how to divide the marital portion of the property.

On paper, dividing the marital estate may seem like a simple division. In reality, it can be a very complex process that requires not only an experienced attorney but various other experts such as financial experts and appraisers.

Examples of times an expert may need to be retained are: (1) to analyze retirement accounts. Financial experts perform analysis in order to evaluate which portions of the accounts are marital and which are separate property. A retirement account may have been created and contributed to prior to the marriage, but if contributions were made after the marriage, then portions of that account are now subject to equitable division. (2) to appraise real property and other assets in which a value must be determined in order to make an equitable division. This can also include performing business valuations to determine the value of a business.

In sum, the property division aspect of a divorce can be quite a complex process where the Court makes a determination based on principles of fairness instead of simple math.

“Limited Liability – Use It or Lose It.” by Nick Booth

 

So your small business is starting to take off, and you’ve decided to take the next step and register your business as a Limited Liability Company (“LLC”) or other limited liability entity.  Congratulations!  This is obviously a big step for you and your business, and symbolizes a significant milestone that you have reached.  However, as an owner of a limited liability entity, it’s important that you understand what it means to have “limited liability” and how to ensure that your business maintains that status.

One of the primary purposes of granting businesses limited liability status is to encourage and provide some space for those businesses to innovate and take risks.  After all, you’re putting in a great deal of your own hard work and money to get your business off the ground, which in turn provides opportunities and benefits for you and those that you serve and employ, and the overarching policy of our national framework is to encourage, and not deter, the creation of those opportunities.  In order to do that, the limited liability entity provides a legal degree of separation between you and the business to protect you personally from liability in the event that your business becomes exposed.  For example, if a party sued your limited liability business for a tort (e.g., an injury that occurred on the business’s premises), then that party’s available recovery would be limited only to the assets of the business, and not you personally.

Your business’s limited liability status, however, does not necessarily mean that you can use it as a vehicle to shield your assets from creditors.  To the contrary, courts in Georgia will disregard your business’s limited liability status, and hold you personally liable, if it finds that you were commingling the business’s finances with your own personal finances, your business failed to adhere to corporate formalities, you failed to adequately capitalize your business, or you otherwise used your business to perpetrate fraud and/or injustice.  This is what’s typically referred to as “piercing the corporate veil” or “alter-ego liability.”

  1. Commingling Assets – Courts in Georgia are permitted to pierce the corporate veil of a limited liability business if it finds that the individual owners of the business “commingled their property, business, or their personal affairs with that of the corporations, or that of the corporations with their own.” Farmers Warehouse of Pelham v. Collins, 220 Ga. 141, 149-150 (1964); see also Cobra 4 Enterprises v. Powell-Newman, 336 Ga. App. 609, 613 (2016); Ishak v. Lanier Contractor’s Supply Co., 254 Ga. App. 237 (2002). A primary example of commingling is when a person utilizes a single bank account for themself and their business.  In order to maintain your limited liability status, it is important that you keep the finances of your business separate from your own finances.  That means that any money flowing out of the business to you must come out through the proper channels (e., as a salary payment or draw of income).
  2. Adherence to Corporate Formalities – Georgia law requires that businesses adhere to certain formalities in carrying out their operations. Some of these formalities include [1] maintaining a registered office and registered agent in Georgia (for LLC’s, see OCGA § 14-11-209); [2] filing an annual registration with the Secretary of State (for LLC’s, see OCGA § 14-11-1103); [3] holding annual meetings and maintaining corporate minutes (not technically required for LLCs but highly encouraged and often contained in the LLC’s organizational documents; see also OCGA § 14-11-310); and [4] maintaining corporate records (for LLC’s, see OCGA § 14-11-313).  If Georgia courts find a gross failure to adhere to required corporate formalities, such finding will authorize them to pierce the corporate veil of a limited liability business. See Christopher v. Sinyard, 313 Ga. App. 866, 867-869 (2012).
  3. Failure to Adequately Capitalize Business – Businesses in Georgia are required to maintain adequate capital in order to satisfy their debts. However, merely being underfunded will not provide grounds to pierce the corporate veil.  “[F]or undercapitalization of a corporation to justify piercing the corporate veil, it must be coupled with evidence of an intent at the time of the capitalization to improperly avoid future debts of the corporation.” Hickman v. Hyzer, 261 Ga. 38, 39-40 (1991).  This does not mean that the directors of an adequately capitalized business that later becomes insolvent without ill-intent is free from potential liability; those directors are “bound to manage the remaining assets for the benefit of [the business’s] creditors.” Ware v. Rankin, 97 Ga. App. 837 (1958).  Bottom line – it’s best to always have enough money in your business’s bank account to pay the bills that you have or anticipate becoming due in the near future.
  4. Fraud/Injustice – As a final umbrella rule to alter-ego liability, Georgia Courts are permitted to pierce the corporate veil where the business has “overextended its privileges in the use of the corporate entity to defeat justice, to perpetrate fraud, or to evade statutory, contractual, or tort responsibility.” G & E Constr. v. Rubicon Constr., 357 Ga. App. 55, 58 (2020); see also Kissun v. Humana, Inc., 267 Ga. 419, 421 (1997). Violation of the above-three rules would necessarily include a violation of this rule, but Georgia Courts have allowed this rule to remain open-ended in the event that some other bad faith abuse of the corporate form is discovered. See G & E Constr., 357 Ga. App. at 59-60.  This catchall rule is intended to solidify the policy that limited liability businesses in Georgia cannot abuse their limited liability status, and owners of such businesses must remain cognizant in their personal and business dealings of potential pitfalls that can arise under this rule.

In sum, limited liability status, when utilized in the proper manner, is an excellent corporate form that can encourage innovation and risk-taking and lead to market improvements that benefit both businesses and consumers.  However, it is important for business owners to take the necessary steps to preserve their limited liability status in order to ensure that such protections don’t end up working against them.  Consulting with knowledgeable legal and financial professionals can often help businesses safely operate within the bounds of the law and maximize their potential for the good of the business and its potential clients, employees, and customers.

“Post-Divorce: When Can Alimony be Modified?” by Susan Heikkila

Alimony awards are court-ordered payments from one spouse to the other based on the financial needs and circumstances of both parties. But under what conditions can this payment be modified or changed?

Either party can file an action with the court requesting a modification of alimony. The party seeking a modification of alimony must prove one of the following:

  1. A substantial change in the financial status of either party (O.C.G.A. § 19-6-18.); or
  2. The party receiving alimony is openly and continuously cohabitating with a third party in a sexual or romantic relationship (O.C.G.A. § 19-6-19).

If you are considering filing an alimony modification action, it is important that the you can provide evidence to support your request, for example, evidence of the change in income or financial status or evidence of the romantic cohabitation as required by O.C.G.A. 19-6-19.

In order to prove a party is cohabitating with a third party in a sexual or romantic relationship (commonly known as the “live in lover” law), the paying spouse must show that the receiving spouse is both living with a third party and engaging in a sexual relationship with that third party. This includes proving the receiving spouse actually resides with the third-party, by living at such residence open and continuously (receiving mail, paying utilities, on the lease, etc.), and is engaging in a sexual or romantic relationship with the third-party.

Examples of a change in financial status includes the paying spouse losing a job, a significant, an involuntary reduction in income, or the receiving spouse securing a job with significantly higher pay than at the time of divorce. In order to prove a substantial change in financial status, you may need to show records of your involuntary loss of employment, bank statements, tax filings, or be able to obtain records from the other party showing they are in a substantially better position financially than at the time of the divorce (pay stubs, bank statements, tax filings, etc.).

When considering a modification of alimony, the judge should consider every relevant fact which has an effect on whether the required changes discussed above have truly occurred. Gallant v. Gallant, 223 Ga. 397 (1967). For instance, if you are showing a reduction in pay or loss of employment, the judge would need to consider the circumstances of these conditions, and whether they happened on an involuntary basis.

Additionally, because the relevant statutory law concerning the modification of alimony allows alimony to be modified based on a change in the income and financial status of either spouse, the financial status of the recipient spouse may be taken into account as well to determine if a modification of alimony is necessary. See O.C.G.A. §19-6-19.

Remember that alimony awards are court-ordered payments, so it’s important to pay exactly as the order directs, even if you think you qualify for a modification. Failure to pay alimony can result in a finding of contempt, fines, penalties, liens on property, or jail.

If you believe you qualify for a modification of alimony based on any of the above, it’s important to consult with an attorney before exercising self-help or getting behind on these payments.

Best of Cobb 2021
Proud to announce that for the 3rd straight year our lawyers have been named the Winner for Best of Cobb in each category nominated and our firm named Best Overall Law Firm for 3rd straight year:
Nicholas Booth- Best Corporate Attorney
Alyssa Blanchard – Best Family Law Attorney
Leslee Champion Hungerford- Estate & Probate Attorney
Leslie O’Neal – Best Individual Attorney
Justin O’Dell- Best Civil Attorney
Justin O’Dell – Best Overall Attorney

Happy to sponsor the The Center for Family Resources First Annual Parade of Playhouses! Volunteer design and construction teams will be creating specially designed children’s playhouses to be showcased at the Town Center at Cobb starting in April. The playhouses will then be auctioned and raffled off to raise funds to support the CFR’s work in preventing childhood homelessness and supporting families on the path to stability. To learn more and purchase a raffle ticket, visit https://thecfr.org/events/parade-of-playhouses/.
Feature in the Atlanta Legal Aid Society, Inc. Newsletter
Our attorney, Susan Heikkila was featured in the Atlanta Legal Aid Society, Inc. newsletter this month.
“Susan, we at Legal Aid are extremely grateful for all you do on behalf of our clients! Your generosity means the world to the people we serve! Volunteering with Atlanta Legal Aid is a great way to have a positive impact on the community during the coronavirus pandemic.”