The state of Georgia recognizes that each marriage partner has an equitable interest in all marital property acquired during the course of the marriage. Unlike states with community property laws, however, this equitable interest does not appear until a divorce is filed. The existence of this potential claim does not impair the transfer of property during marriage by either party.
The first step is to determine what property held by the parties is actually marital property. There are several forms of property owned by the parties to a divorce:
- Separate property of one spouse owned before the marriage
- Separate property of one spouse acquired during the marriage
- Separate property of one spouse, which is a replacement, or substitute for property owned before the marriage.
- Appreciation in value of the separate property
- Increased value of separate property which is caused by active involvement of either spouse during the marriage, and subject to marital property claims
- Jointly owned marital property
- Marital property titled in only one spouse’s name, but subject to marital property claims
There are specific rules, set out in case law, for determining which assets are separate property, and which assets are marital property, and thus subject to equitable division.
- The general rule is that all property acquired by either party during the course of the marriage using marital assets, regardless of title or source of payment, is marital property, subject to equitable division.
- An exception to the general rule would be that an asset acquired by one party during the marriage by inheritance is not a marital asset.
- Another exception is that gifts to one party during the marriage are not marital assets. However, gifts that the parties make to each other are marital property, subject to division.
- Property can be split into both separate and marital portions, based upon a complex formula, using the facts of each case.
- A determination that certain property is not marital, and therefore not subject to equitable division, does not always protect that property completely from the other spouse. For more on that, see the article on Alimony and Spousal Support.
Once a court determines which property is actually marital property, and subject to equitable division, then it must determine how that property is to be divided. Unlike community property states, the courts in Georgia are not bound by any predetermined rules or formulas. A divorce court is a court of equity, and the court has complete discretion in awarding each spouse any particular marital property, and in any proportion that the court finds is fair under all circumstances. The court is even entitled to consider the conduct of parties during the marriage in making its determination of what is a fair and equitable division of marital property.
This property may consist of all assets acquired by either party, whether jointly titled or held alone, and even includes retirement benefits, and other accounts acquired by either party through employment. It also may include additions to premarital property that were made during the marriage. In determining what is a fair and equitable distribution of the marital assets, the court may consider:
- The separate assets and financial status of each party
- The income and earning capacity of each party
- The conduct of the parties towards each other during the marriage
- Any wrongful conduct with regard to the diminution or dissipation of assets by either party
- The future needs of either party, including retirement planning
- The debts of each party
Whenever there is a need to divide either partys interest in a retirement benefit, 401K, pension, or other future benefit that cannot be liquidated immediately, the court can issue a Qualified Domestic Relations Order (QDRO) which will effectively divide the asset into two separate accounts, one for the participant spouse, and another account for the non-participant spouse.
The Final Decree of Divorce will not be granted until the parties have resolved all legal issues between them, either by settlement or trial. A divorce could be pending for months until all these issues are resolved. This could be further complicated if one party insists on a trial by jury. In Georgia, either party can demand that a jury decide all financial issues of a divorce, including the equitable division of property