Partner Drew Wilkes has been appointed as an At-Large-Member of the Executive Committee within the Family Law Section of the State Bar of Georgia.  The Family Law Section, comprised of nearly 2,000 active members, is active in the State Bar of Georgia and strives to keep its members updated on all matters within the legal specialty of Family Law.   In addition to assisting in drafting legislation in the areas of family law, the Section coordinates and sponsors continuing legal education via the annual Family Law Institute (in May) and the Nuts & Bolts of Family Law Seminars (traditionally held in Atlanta and Savannah).   

Andrew M. Wilkes 

Drew Wilkes Appointed to Family Law Executive Committee

Thank you, WTOC, for having attorneys Amelia Stevens and Joy Bonner speak about this year’s donation drive for Parker’s House at Union Mission. Please click the link below to purchase items from the shelter’s Amazon registry or stop by our office to drop off donations. \n\nhttps://www.amazon.com/hz/wishlist/ls/OK1EZDP7HMBK/ref=hz_ls_biz_ex?pldnSite=1\n\n
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Amelia C. Stevens

WTOC Spotlights Oliver Maner's Donation Drive

Congratulations to Oliver Maner Partner Bryan Schivera on being
selected as a 2022 Rising Star by the Daily Report Georgia Legal Awards. This award recognizes and honors the state’s top lawyers 40 and under, and we’re so pleased to have Bryan among such a distinguished group of attorneys. Congratulations to Bryan on this prestigious award, and thank you for all of your work on behalf of our firm and clients. \n


Partner Bryan Schivera Selected as Rising Star by The Daily Report

Union Mission hosted its 7th Annual Raising Hope at the \nSavannah Convention Center\n. The event was presented by \nOliver Maner LLP\n and \nNine Line Apparel \nand emceed by Rabbi Robert Haas, Leader of \nCongregation Mickve Israel\n. Special honorary sponsors included The Sarah Mills Hodge Foundation and \nParker’s\n. The evening began with a cocktail reception featuring \nJeremy Davis & the Equinox Jazz Trio\n and travel silent auction items, followed by dinner.

“The funds raised from Raising Hope are vital to assisting those who are ready to leave homelessness behind for good,” said William Hunter, Presenting Sponsor and Partner at Oliver Maner. “Raising Hope will help Union Mission continue to provide comprehensive supportive services to give people the tools they need to rebuild their lives.”

The program featured Keynote Speaker Douglas Brinkley, an American Historian and Best-Selling Author. He is the Katherine Tsanoff Brown Chair in Humanities and Professor of History at Rice University, CNN Presidential Historian, and a contributing editor at Vanity Fair. Brinkley works in many capacities in the world of public history, including on boards, museums, colleges and historical societies. \nAbout Union Mission: \nUnion Mission \nhas cared for Savannah’s homeless community for more than 80 years offering emergency, transitional and permanent housing solutions to those in need. Union Mission also collaborates with the community’s network of service providers to make comprehensive, wrap-around supportive services, such as mental health counseling and culinary arts job training available to all homeless persons in the community. The mission of Union Mission is: \nto partner with people to end their homelessness through housing and supportive services\n. For more information on how to support Union Mission, contact Michael Traynor, President & CEO, at \nmtraynor@unionmission.org\n or (912) 238-2777 or visit \nwww.unionmission.org\n. \n


Timothy D. Roberts

Union Mission Hosts Annual Raising Hope Event to Benefit Emergency Housing Programs

Oliver Maner is proud to support \nUnion Mission\n as the Title
Sponsor of Raising Hope on June 7. Thank you to Partner Bill Hunter for serving on the Union Mission Board of Directors and Executive Committee and getting the firm involved in such a wonderful cause. \nCheckout this \nFacebook post\n.  For tickets and sponsorship opportunities, visit \nhttps://www.unionmission.org/raisinghope\n.\n


William J. Hunter 

Union Mission's Raising Hope 2022

Oliver Maner is proud to sponsor the Executive Women’s Day at the Club Car Championship at the Landings on April 1.  Oliver Maner Partner, Paul H. Threlkeld, will be the emcee. The event will begin with a keynote address by SSU President Kimberly Ballard-Washington and include a merchant marketplace and lunch. A panel discussion will close out the inspirational event with attendees invited to stay for the golf tournament, including special access to at The Landings Company Eagle’s Nest on the 18th green. For more information or to participate, contact Brit Donahue at 614-315-8787 or \nbdonaue@hnssports.com\n.



Paul H. Threlkeld  

 Club Car Championship at The Landings Club 2022 Executive Women's Day

Sixteen attorneys from Oliver Maner LLP were recently recognized as 2022 Georgia Super Lawyers and Rising Stars.\n\n“We’re honored by this recognition.  These lawyers reflect the hard work done by all of our lawyers and staff”, said Patrick T. O’Connor, partner.  “We work hard for our clients, and we will strive to continue to earn their trust and confidence every day.”\n  \nSuper Lawyers surveys outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The patented selection process includes independent research, peer nominations and peer evaluations.\n \nOliver Maner attorneys named to the 2022 Georgia Super Lawyers list include:\n \nWilliam P. Franklin, Jr. – Of Counsel\nDavid H. Dickey – Partner\nI. Gregory Hodges – Partner\nPatrick T. O’Connor – Partner\nPatricia T. Paul – Partner\nTimothy D. Roberts – Partner\nLee A. Summerford – Partner\nAndrew M. Wilkes – Partner\nWilliam J. Hunter – Partner\nBenjamin M. Perkins – Partner\nPaul H. Threlkeld – Partner\n \nOliver Maner attorneys named to the 2022 Georgia Rising Stars list include:\n \nT. Lawrence Evans – Partner\nR. Benjamin Lingle – Partner\nBryan A. Schivera – Partner\nDavid Bobo Mullens, III – Partner\nI. William Drought, III – Associate\n \nThe list and profiles of selected attorneys are published in Super Lawyers Magazine, distributed to attorneys in their state or region. Super Lawyers is also published as a special section in leading city and regional magazines across the country. Lawyers are selected to a Super Lawyers list in all 50 states and Washington, D.C.\n

Oliver Maner attorneys named Georgia Super Lawyers and Rising Stars

The financial exploitation of elders is becoming an exceedingly common occurrence as the population ages. Financial elder abuse is the illegal or improper use of an elder's funds, property, or assets. The abuse can take many forms, ranging from outright theft via forged checks or withdrawals to the alteration of beneficiary designations. One form of such abuse is improperly influencing an elder to make or alter a will, thereby disposing of estate assets in a manner contrary to the elder’s true intentions. In most cases, the perpetrator of this abuse is a family member or trusted friend. Accordingly, the exploitation may not be discovered until the passing of the elder who allegedly made the will (the “testator”). \n\nTime can be of the essence after a victim’s passing, as probate
deadlines begin to run immediately upon service of notice of the offering of a will for probate. A legal challenge to a will (a “caveat”) must be made immediately upon receiving this notice. Will caveats are typically made on two grounds: Lack of testamentary capacity and/or undue influence. \n\nDiminished capacity often plays a central role in a perpetrator’s ability to influence a testator to create or alter a will. Because the required capacity to draft a will is lower than a contract, challenging a will solely on the ground of lack of testamentary capacity can be very challenging. In general, a testator will be deemed to have the required capacity to make a will when they are “capable of framing a decided and rational desire as to the disposition of his or her property.” Courts typically apply a 4 part test in which they ask whether the testator (1) understands the nature of the act (that is, that this is the execution of an instrument that will dispose of the testator's property at death), (2) understands the nature of the property that is subject to disposition, (3) is capable of remembering generally those individuals who, by blood or affection, would be the natural objects of the testator's bounty, and (4) is capable of conceiving and expressing any intelligible distribution scheme. Because the required capacity is so minimal, an individual suffering from Dementia or other cognitive impairment will not be presumed to lack capacity. In fact, capacity is presumed and the caveator most overcome this presumption. Even though a testator’s diminished capacity may not by itself be sufficient enough to overturn a will, it is highly relevant in determining whether any undue influence was exercised over them.\n\nA scheme of control and influence being exerted by the perpetrator over the testator is required to overturn any will on the grounds of undue influence. This “control” must reach a level where the perpetrator’s desires are substituted for those of the testator. Perpetrators will typically engage in a variety of behaviors to exert their influence such as isolation from friends and family, control of medication, control of finances, and taking the lead role in arranging the drafting and execution of the will. This may mean everything from communicating with the drafting attorney and transporting the testator to their office to actually drafting the will.\n\nConvincing a judge or jury of lack of capacity or undue influence is a matter of presenting compelling evidence in a variety of forms. This typically involves a combination of financial and medical records and testimony of family and friends demonstrating the will was unlawfully procured. For instance, fraudulent wills often alter a dispossessory scheme that had been in place for a significant period of time with a long-standing attorney or disinherit the expected beneficiaries/family members. Absent initiation of litigation, however, these records and testimony will not be discoverable by those seeking to challenge a will. That is why in addition to remaining vigilant in protecting an elder’s finances and legal affairs during their life, potential caveators must be quick to contact an attorney once any formal proceedings are filed in probate court.    \n\n



Bryan A. Schivera  

Challenging a Will in Georgia

In December 2021, firm partner Paul H. Threlkeld presented at the Georgia Supreme Court’s 175th anniversary during a seminar sponsored by the Georgia Legal History Foundation. Threlkeld’s lecture highlighted the Georgia Supreme Court’s \nPavesich v. New England Life Ins. Co. \ndecision from 1905 which was the first decision by a state supreme court to recognize the right to privacy. Pavesich has been cited more than 200 times in courts across the United States and is considered a seminal opinion in privacy and personal liberty jurisprudence.

Paul Threlkeld presents at the Georgia Supreme Court’s 175th Anniversary in seminar sponsored by the Georgia Legal History Foundation

Statistics show more than 180 women each night are homeless in Chatham County.  \nUnion Mission\n recognized the need for a program to serve these women and developed Parker's House: A Home for Women, set to open in the first quarter of 2022.\n\nOliver Maner held a donation drive in November to help stock the shelves of Parker's House with supplies, and it was a huge success! \nWTOC-TV\n covered the great news. \nWatch the segment here.\n\n


Oliver Maner's Donation Drive to Union Mission Is A Huge Success

At the beginning of the holiday season, Oliver Maner pledged to help fight homelessness in our community by supporting Parker’s House: A Home For Women. Under Union Mission's umbrella, it is an emergency housing center and program for homeless women that will open in the first quarter of 2022. The firm’s effort, headed by attorneys Amelia Stevens, Victoria Nease and Joy Bonner included a challenge to other Savannah law firms and members of the community to collect supplies so the program will open fully stocked.\n \nThe response has been wonderful, and one large donation, in particular, caught the attention of the firm.\n \nIn late November, Victoria White and her daughter Alethia Edwards, two individuals not affiliated with a Savannah law firm or business, dropped off a carload of donations for the women’s shelter. It was such a large amount of supplies, Oliver Maner Firm Administrator Sara Jo Rowell couldn’t let them leave without finding out more about them and the story behind their generosity.\n \nMs. White was happy to oblige. Many years ago, the mother of seven children was tragically widowed at a young age. Despite the odds stacked against her, the family pulled through with the help of friends and the community. Her children are grown now and have families of their own, and they never forgot how blessed they were to survive intact.\n \n“I've always been a very compassionate person and I always felt the need to give back. I became a single mom at a very early age, and we have just been blessed. I just feel the need to help someone in need with what little do I have. I always want to try to share it and teach my children,” White said.\n \nThis informal holiday custom became a family-wide tradition four years ago when Ms. White and her children decided to forego giving gifts to each other and instead chip in to a common cause. They share ideas on what charity to support and do the best they can to help.\n \nHomelessness was a cause they all agreed to support in the first years of their endeavor. Helping women suffering from domestic abuse was also a cause to which they offered assistance. This year, Ms. White’s daughter Alethia Edwards saw the story of Parker’s House, which is set to open early next year, and the donation drive that Oliver Maner was hosting. A program exclusively for homeless women resonated with Alethia because she believed that when people hear about homelessness, they typically think of men.\n \n“My daughter saw this organization for homeless women on the news and she asked me, ‘Mom, why don’t we do something for them?’,” Ms. White explained. “We all agreed that would be a good thing.”\n \nThe family can relate to the challenges these women face, to an extent. While they were never homeless after Ms. White’s husband died, there were struggles. “I always said, if it wasn’t for someone else reaching out to help us, we wouldn’t be where we are today, able to help others,” she added. “I appreciated it so much and it is such a blessing.”\n \nMs. White and her family are the personifications of what Oliver Maner set out to do when it first made the challenge to others to join in and support the fight against homelessness. While many local law firms and citizens answered the call, a family joining together to make a difference in lieu of giving each other gifts is a remarkable testament to the generosity of our community. Their heartwarming tale of perseverance, gratitude, love and selflessness is inspiring, and a lesson that extends beyond the spirit of the holiday season.\n

Local family answers Oliver Maner's challenge to donate to the women’s emergency housing center supply drive  

Georgia’s top attorneys were chosen by their peers to be ranked in the 19th-annual listing in the statewide magazine\n\n(SAVANNAH, Ga.) Seven partners of the Savannah law firm Oliver Maner LLP were recently named to Georgia Trend's 2021 Legal Elite list. Robert W. Schivera, Timothy D. Roberts, Lee Summerford, Andrew M. Wilkes, Benjamin M. Perkins, Paul H. Threlkeld and George T. Major Jr. were recognized by their peers as being outstanding in their fields of practice.\n\nThis is the 19th time the magazine has recognized attorneys considered the best in their field.\n\nThe lawyers selected this year practice throughout Georgia in markets ranging from large metro areas to smaller rural towns and represent 15 distinct legal practice areas: Bankruptcy/Creditors’ Rights, Business, Corporate, Criminal, Entertainment & Sports, Family, General Practice/Trial, Healthcare, Immigration, Intellectual Property, Labor & Employment, Personal Injury, Public Finance/Bonds, Real Estate/Construction and Taxes, Estates & Trusts.\n\nThe following partners at Oliver Maner were recognized:\n\n•	Robert W. Schivera in Taxes, Estates & Trusts\n•	Timothy D. Roberts in Business Law\n•	Lee Summerford in Corporate Law\n•	Andrew M. Wilkes in Family Law\n•	Benjamin M. Perkins and Paul H. Threlkeld in General Practice/Trial Law\n•	George T. Major Jr. in Personal Injury\n\nTo compile this listing, attorneys submitted hundreds of nominations to Georgia Trend's website. Anyone who is a member of the State Bar and lives and practices in Georgia was eligible to vote and to be voted onto this list. Respondents were not allowed to vote for themselves.\n\n

Georgia Trend Names Seven Partners of Savannah's Oliver Maner LLP as "Legal Elite" 

Oliver Maner earned another honor as U.S. News & World Report’s Best Lawyers rating entity named the venerable firm to its 2022 list of “Best Law Firms.” This accolade is in addition to multiple attorneys at the firm earning individual awards earlier this year. 
\n
Available only in select markets, “Best Law Firm” winners are specific to practice areas. They are determined based on several factors, including feedback from lawyers recognized by Best Lawyers on individual lawyer and firm-wide work, the size and coverage of the firm in a specific practice area, historical analysis of the firm’s “Lawyer of the Year” awards in this area, and research surrounding the firm’s overall scope and areas of expertise.\n
“It’s gratifying to be recognized like this by such a distinguished publication. I know how hard our people work, because I see what they do day in and day out to serve our clients. We are proud of this honor and will work even harder to justify it,” said Patrick T. O’Connor, a partner at Oliver Maner.\n
Recognition by Best Lawyers is based entirely on peer review. The methodology is designed to capture, as accurately as possible, the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area. It is a sophisticated, conscientious, rational and transparent survey process designed to elicit meaningful and substantive evaluations of the quality of legal services.\n
The firm achieved the highest Tier 1 ranking for 12 out of 15 categories: \nBet-the-Company Litigation\nCommercial Litigation\nLegal Malpractice Law - Defendants\nMediation\nMedical Malpractice Law - Defendants\nMunicipal Law\nPersonal Injury Litigation - Defendants\nPersonal Injury Litigation - Plaintiffs\nReal Estate Law\nTax Law\nTrusts & Estates Law\nWorkers' Compensation Law - Employers\n\nBest Lawyers is the oldest and most respected lawyer ranking service in the world. For 40 years, Best Lawyers has assisted those in need of legal services to identify the lawyers best qualified to represent them in distant jurisdictions or unfamiliar specialties. Best Lawyers awards are published in leading local, regional and national publications across the globe. \n
Regarding individual honors, Oliver Maner boasts 11 attorneys on this year’s “Best Lawyers in America” list, including the following: William P. Franklin, Jr., David H. Dickey, I. Gregory Hodges, Robert W. Schivera, Patrick T. O’Connor, James P. Gerard, Patricia T. Paul, Timothy D. Roberts, Lee A. Summerford, Andrew M. Wilkes and William J. Hunter.

U.S. News Names Savannah’s Oliver Maner Among The “Best Law Firms” for 2022

In recognition of November as National Homelessness Awareness month, Oliver Maner raising funds and collecting supplies for Union Mission’s \nA Haven for Her \nCapital Campaign to expand their Emergency Housing Program to unaccompanied, homeless women. \n\nThe firm is holding an internal donation drive and asking for the community’s help to collect goods for the new women’s program expected to open in the first quarter of 2022. \n\nAttorneys Amelia Stevens and Victoria Nease are leading the effort and challenging other Savannah law firms and businesses to help homeless women in our region.\n\n“Helping these women will, in turn, improve our community,” said Stevens, who also volunteers as an Adult Exploring Adviser with the Coastal Georgia Council of Boy Scouts of America. “Organizations like Union Mission help make Savannah a better place. Hopefully, our efforts will make life better for these women and assist this nonprofit in meeting its goal of helping 100 women each year.”\n\n Donations of goods can be dropped off at the Oliver Maner offices at 218 West State St. during business hours. The firm will accept donations until Tuesday, Nov. 30, then donate the items to Union Mission. This new Emergency Housing Program is in need of the following:\n\nPersonal care items (toothpaste, shampoo, soap, feminine hygiene products, etc.)\nBedding (sheets, blankets, pillows and pillowcases)\nLaundry supplies\n\nUnion Mission created an \nAmazon Wish List\n with the items needed to get the program started, as well as for the long term. Statistics show more than 180 women each night are homeless in Chatham County. \n\nThe renovated space will have 16 bedrooms and eight bathrooms serving 100 annually. It’s designed to provide emergency housing and supportive services to 32 unaccompanied, homeless women for up to 90-days at a time. Union Mission provides basic human needs for the residents, including food, clothing, transportation, access to mental healthcare, employment support and more. The goal of this program is to help residents maintain stable housing and become independent members of the community. \n\nOnce completed, this new Emergency Housing Program will be the only facility along the I-95 corridor from Florida to South Carolina dedicated solely to unaccompanied women experiencing homelessness. \n\n“Homeless women can be living alone on the streets, sleeping in their cars, couch-surfing or if able, living in motels,” said Union Mission President and CEO Michael Traynor. “Many of them feel unsafe. With your help, and in partnership with the broader community, we will begin to address the need and provide a safe, supportive space for unaccompanied women to transition out of homelessness.”

Oliver Maner To Raise Funds and Collect Supplies for Women’s Emergency Housing Program

Celebrity deaths often highlight what not to do in the field of estate planning. James Brown and Prince famously died without wills. Fifteen years later, Brown’s estate is still in litigation. Three years later, Prince’s estate is in the middle of an aggressive estate tax audit. Recently, we learned that prior to his death, Larry King handwrote a will. Ironically, Mr. King was likely successful in meeting the bare minimum standards under the law for an enforceable will. However, he was also likely successful in plunging his family into years of litigation and heartache. Let us explain why.\n\nBy all accounts, Mr. King had an established estate plan in 2019. However, following the initiation of divorce proceedings and a stroke, he handwrote a will which is short enough to state here in its entirety: \n\nThis is my Last Will & Testament. It should replace all previous writings. In the event of my death, any day after the above date I want 100% of my funds to be divided equally among my children Andy, Chaia, Larry Jr Chance & Cannon.\n\nThere are several material details we do not know. First, what pre or post-nuptial agreements were in existence requiring testamentary gifts by Mr. King? Second, what trusts were in existence directing some or all of his assets at death, regardless of the language of the will? Third, what type of titling, beneficiary or Pay on Death (“POD”) statuses, or buy-sells were in place for his real property, financial accounts and closely held business interests? Finally, what type of California community property rights did his wife retain since Mr. King passed while separated, but not yet legally divorced? Any one of these questions could have a drastic impact on the disposition of Mr. King’s Estate. \n\nAssuming for a moment that none of those details materially impact his estate, what exact legal issues are presented by the handwritten will? First, there is the basic question of enforceability. Unlike California, Georgia requires all wills to be witnessed by two qualified individuals, even if the will is entirely handwritten. So, absent invalidity on some other grounds (eg: testamentary capacity, undue influence, fraud, etc.), Mr. King’s handwritten will likely meets the formality requirements to be admitted to probate in Georgia. However, admittance to probate is where the problems begin. The two largest issues created by his will are Mr. King’s failure to appoint an Executor and use of the word “funds” in the only sentence actually disposing of assets. As a result, in addition to the likely challenges to the Will on capacity grounds, there will be a legal battle as to both the appointment of the Executor and whether Mr. King intended to dispose of the entirety of his Estate or just cash or cash like assets. You would not typically expect real property, personal property, royalty rights or closely held business interests to be encompassed by the term “funds.” If Mr. King’s words do not adequately dispose of his assets, a dispute would follow over whether his attempted revocation of previous wills was effective or whether a partial intestacy results and the laws of the state are employed to distribute his estate.\n\nMr. King’s circumstances are unfortunately not unique. The legal pitfalls surrounding divorce and estate planning are abundant. While there is protection for individuals failing to change their will after the entry of a final divorce decree (in Georgia the former spouse is treated as if he or she had predeceased the testator), there is no such protection for those passing away during divorce proceedings. Because he lived in a community property state, Mr. King would have also faced unique challenges in disinheriting his spouse prior to their formal divorce. Interestingly, Georgia is the only state in the country that would have permitted Mr. King to effectively disinherit his spouse in a will. \n\nEven more challenging to account for are non-probate assets (ie., life insurance, retirement accounts, joint financial accounts, etc.). Georgia law does not automatically void the designation of an ex-spouse as the beneficiary of a life insurance policy in the event of a divorce. Similarly, divorce does not automatically void the designation of an ex-spouse as the recipient of an employee's retirement plan benefits nor does a property settlement ordered in conjunction with a divorce automatically allow the ex-spouse access to the employee's retirement benefits. Even prior to divorce (with the potential exception of marriages of less than one year), beneficiary designations on retirement accounts can only be changed by the owner of the account and in conformance with the rules that are set out by the plan sponsor. With regard to 401ks, federal laws actually require spousal consent in writing before removing a spousal beneficiary.   \n\nFor those with a variety of probate and non-probate assets, estate planning can already feel like a complex task. Introducing divorce into the picture can certainly complicate and endanger the plans we all have for taking care of our families at our deaths. A competent team of domestic and estate planning attorneys, often working in tandem, is necessary to ensure you arrive on the other end with your property and plans intact. Fortunately, you do not have to be famous or rich to achieve this outcome.\n\n\n

What Larry King Can Teach Us About Estate Planning

By Trevor Kupfer on August 5, 2021\n\nThere’s a vast difference between the resources of a small startup and a thriving corporation, yet both need legal advice—and that’s usually not cheap. As a result, some law firms and nonprofit entities try to represent the have-nots on a pro bono basis (meaning free of cost) or “low  bono” basis (meaning at a reduced cost).\n\n“Lawyers care about playing a role in our system of justice. When lawyers participate, the system works better,” says John E. Thies, a business litigator at Webber & Thies and past president of Illinois State Bar Association. “So all of us have an innate interest in doing a certain amount of pro bono work. And if lawyers don’t, they should.”\n\nSo how do lawyers decide to take a case at a discounted rate? A number of factors come into play, including their area of law, current workload, and the complexity of the case.\n\n“Is it something we can handle? Are we available to do it at that particular time? What’s the source? What is the particular job or task? And in the end, what’s an appropriate fee for the circumstances?” Thies says of the criteria he considers. “And if it’s a not-for-profit, or somebody who needs a limited amount of help, there’s a greater chance that the firm would get involved. But we’ve handled some very sophisticated cases on a pro bono basis.”\n\nThe culture and resources of the law firm can be a determining factor as well, says Merri A. Baldwin, a professional liability attorney at Rogers Joseph O’Donnell and former president of the Bar Association on San Francisco. “My firm has plenty of resources if I were to take on a pro bono lawsuit, but a solo attorney or in-house counsel may not have those kinds of resources.”\n\nUsually a firm’s website will detail its commitment to pro bono and low bono. “Some firms are all about just billable hours,” says Patrick T. O’Connor, former president of the State Bar of Georgia and civil defense attorney at Oliver Maner. “In large part, the firm’s philosophy about helping nonprofits or indigent people depends on the leadership of the law firm.”\n\nLarge firms often have pro bono committees that decide which cases their attorneys will take and when. Some firms have pro bono coordinators and/or ask young attorneys to serve as pro bono fellows to gain experience.
That doesn’t mean a small firm is less likely to take a business case; in fact, it may have more incentive.\n\n“With startup businesses—somebody you're just trying to help get incorporated—oftentimes lawyers have a mixed motive,” says O’Connor. “You want to help somebody, but you also think, ‘Maybe this business will be
successful and one day we’ll become legal counsel for this business.’ I see that more often with lawyers who are trying to develop a client base, because if you help a business start up and two years from now it’s very successful, then the business can pay legal fees and can become your paying client.”\n\n“In business, more common than doing something for free is to provide more of a discounted rate,” says business litigator and past president of the State Bar of Michigan Jennifer M. Grieco. “Our preference would be to develop that relationship, so that when they have more significant issues, and as they expand and grow, you can be a partner with them.”\n\nWhile O’Connor is at the phase in his career where he’s more selective about the work he takes, he still plays a role in giving back. “In Georgia, young lawyers are required to be mentored. They learn about pro bono efforts through the mentoring program and through the Bar,” he says. “What I do with the lawyers that I mentor is I tell them that they should seek out pro bono opportunities. But when they find them, they should confer with me or some other more senior lawyer in the firm to make sure it’s an appropriate matter to handle.”\n\nWhile you can reach out to firms directly, other routes may be more fruitful.\n\n“If a firm has a pro bono coordinator, then it might be possible to get the firm's attention directly for a pro bono matter,” Baldwin says. “But the likelihood of finding representation is going to be greater when a pro bono client goes through an organization, because that organization can run due diligence and make sure the case has merits and the person meets their eligibility guidelines.”\n\nBar associations can often point you in the right direction, as can an online search for terms such as “legal aid society,” “lawyer referral service” or “mediation center.” Asking other business owners can also be helpful, and business groups usually have resources.\n\nIt may take time to find someone willing to negotiate rates and take your case, but it’s better than doing it yourself.\n\n“For the majority of cases it would be in a person’s best interest to get legal representation to handle a legal matter,” O’Connor says. “I’ve been involved in dozens of matters that were in litigation only because a lawyer was not involved on the front end. And then it winds up in litigation and the cost is much higher and the matter becomes much more complicated. Whereas if the people involved had had a lawyer at the outset, they might have
paid some fees, but they would have been much better off.”\n\nAt the very least, Thies says, “it can’t hurt to ask.”\n\n“W always do our intake and our calls for free—as far as finding out what the facts are, maybe even looking at some documents, figuring out what it is that they need,” Grieco says. “If it is something that’s outside our area of expertise, we can’t take it low bono for whatever reason, or we are not a good fit for them, we want to direct them to somebody who will. But if it’s just a couple hours worth of work to get them started in the right direction, then we’re happy to do that. I think that that’s one of those things where karma kind of all comes back.

Patrick T. O'Connor

NO BUSINESS LIKE PRO BONO BUSINESS- How to find attorneys who represent businesses at a discount

Largely as a result of their flexibility, Limited Liability Companies (“LLCs”) account for the vast majority of newly formed business entities. The Operating Agreement of an LLC is the governing document and often only memorialization of LLC ownership. A well drafted and thought out Operating Agreement is worth its weight in gold. Not only can an Operating Agreement head off and resolve potential membership disputes, it can also protect the members from various tax and transfer issues. \n\n#1 – Failing to draft one\n\nAll too frequently this document is ignored or parroted from an internet repository to disastrous effect. Much like fences make good neighbors, Operating Agreements make good partners and the lack of one can drive an LLC into the ground. Similar to a Will, if you fail to draft one, the state will dictate the terms of your business relationship, likely to everyone’s displeasure.\n\n#2 – Failing to adequately address Management and deadlocks\n\nUnlike a corporation, LLCs by default have no Board of Directors or Officers. Rather, much like a partnership, the default provisions in Georgia grant members the right to bind and manage the LLC. However, members may wish to appoint “Managers” of the LLC. A well drafted Operating Agreement will address who these Managers are, how they can be elected, removed and replaced and their duties, powers and compensation. Inherent in any LLC governed by an even number of Managers or Members (or where Members have veto authority over certain Manager actions) is the possibility for deadlock. The possibilities for breaking such a deadlock are endless but they will not be found in the default provisions of Georgia law and must be drafted into an Operating Agreement.\n\n#3 - Failing to consider the resultant fiduciary duties and need for restrictive covenants\n\nClosely related to Item 2, all parties must be aware that members in a Manager-managed LLC generally owe no fiduciary duties to the LLC or their fellow members. This can arise as a rude awakening in the form of members taking actions that are not in the best interest of the LLC. If this is a concern, an Operating Agreement must include restrictive covenants and other provisions which protect the LLC’s business interests.\n\n#4 - Failing to adequately protect member rights in a Manager-Managed LLC\n\nTypically arising in Manager-managed LLCs, it is imperative that any non-Manager member or minority owner take the time to ensure their interests are adequately protected by an Operating Agreement. Otherwise, a member can easily fall subject to various “minority squeeze out” techniques by controlling members or managers. These can range from the seemingly benign (lack of full rights to LLC records) to the patently unfair (oppressive actions resulting in ownership dilution).\n\n#5 - Failing to address mandatory distributions\n\nClosely related to Item 4 is the necessity for an Operating Agreement to set a formula for mandatory distributions to members. A failure to do so can be compounded if one member or his family is on the LLC payroll, to the exclusion of other members. Further, an LLC taxed as a partnership results in partners being subject to tax as income is earned by the partnership even in the absence of any distributions (referred to as “phantom income”). Accordingly, requiring mandatory tax distributions made on a regular basis can ensure members will not be holding a phantom tax bill with no cash to pay it.\n\n#6 - Failing to adequately provide for transfer restrictions \n\nMost people know that they want a “Buy-Sell” agreement. Broadly speaking, transfer restrictions are typically included in an Operating Agreement. They encompass both prohibitions on or requirements for transferring LLC ownership to third parties and triggers for buyout rights for other members and/or the LLC itself (eg: death, disability, retirement, etc.). These provisions can get complicated quickly and are highly dependent on the unique dynamic between any given LLC’s members. Perhaps more than any other type of provision found in an Operating Agreement, there is no “one size fits all” approach with transfer restrictions, as is often claimed by legal websites or form repositories.\n\n#7 - Failing to draft the Operating Agreement to conform with tax elections\n\nWhile a full discussion of the various tax elections and implications of operating an LLC is beyond the scope of this article, any Operating Agreement must be drafted taking into account the current and potential future tax elections of an LLC. With more than one member, LLCs are taxed by default as partnerships, requiring the filing of a Partnership Tax Return (Form 1065). However, many LLCs elect to be taxed as an S-Corporation (Form 1120S). The S-Corp tax election, in particular, is susceptible to being lost as a result of language contained in an Operating Agreement, with very negative effects for the LLC and its members.\n\n#8 – Failing to Address Member Voting Power\n\nBecause LLCs are most akin to partnerships, the default Georgia law provides that each member (or, if management is vested in managers, each manager) shall have one vote, with decisions made by majority vote with respect to most matters. This can be a devastating outcome for a member who thought by being 51% owner of an LLC, they were in a position of power. In fact, a 1% owner of an LLC has an equal membership vote to a 99% owner if an Operating Agreement fails to properly address membership voting rights.\n\n#9 - Failing to address distributions upon dissolution \n\nMembers may bring different contributions to an LLC in the nature of cash and “sweat,” resulting in equal capital accounts as memorialized in an Operating Agreement. Unless addressed properly, however, in the event of a dissolution these members may receive an equal distribution of the company assets, even if those assets consist entirely of the cash contributed by one member.\n\n#10 - Failing to address BBA tax elections\n\nA well drafted Operating Agreement must include language to address the new partnership audit regime introduced by the Bipartisan Budget Act of 2015, effective as of 2018. This Act imposes liability for federal income taxes directly on the partnership, regardless of any changes in ownership between the taxable year in which the partnership items arose and the taxable year in which the partnership items are adjusted. In short, unless the Operating Agreement is drafted appropriately, a member who was not in the LLC in a year under audit could be liable for the partnership’s previous tax liability.\n\n

Top 10 LLC Operating Agreement Mistakes

On May 18, 2021, Bill Hunter presented "The Happy Warrior and the Six Deadly Sins That Prevent Us from Being Great Trial Lawyers" at the SE GA ABOTA Chapter's Lunch and Learn Webinar Series.  The webinar was sponsored by Legal Technology Solutions, Inc.  ABOTA is an organization dedicated to the preservation of the right to trial by jury in our justice system.  

Bill Hunter Presents at SE GA ABOTA Lunch and Learn Webinar

The effects of Georgia’s 2005 sweeping tort reform legislation continue to alter the landscape for litigants. One of the latest alterations will most likely be considered by proponents of tort reform as an unintended consequence because it eliminates a doctrine that has long been favorable for employers. For several decades Georgia lawyers on both sides of the “v.” dealt with the decisional law rule known as the “Respondeat Superior Rule,” which states:\n\n[I]f a defendant employer concedes that it will be vicariously liable under the doctrine of respondeat superior if its employee is found negligent, the employer is entitled to summary judgment on the plaintiff’s claims for negligent entrustment, hiring, training, supervision, and retention, unless the plaintiff has also brought a valid claim for punitive damages against the employer for its own independent negligence. \nQuynn v. Hulsey\n, 	 Ga. 	850 S.E.2d 725, 727-28 (Nov. 2, 2020) (Bethel, J. concurring in judgment only; McMillian, J. dissenting) (quoting Hosp. \nAuth. of Valdosta v. Fender\n, 342 Ga. App. 13, 21 (2017) (citations omitted)). In other words, once an employer admitted the agency relationship and that it would be vicariously liable for the negligence of its employee, any independent claims against the employer that arose from employing, training, supervising, or retaining that employee would collapse unless the plaintiff had a valid claim against the employer for punitive damages. The theory behind the Rule was that once the employer admitted it was responsible for the negligence, if any, of its employee, allowing independent claims against the employer for negligent hiring, retention, training, and entrustment would not entitle the plaintiff to any greater recovery but would serve to prejudice the employer. Id. (quoting \nMasTec North Am. v. Wilson\n, 325 Ga. App. 863, 865 (2014) (citation and punctuation omitted)). \n\nThe Rule’s obvious benefit to defendant employers was that evidence of poor hiring practices, training, retention, and supervision of employees would be deemed as irrelevant, immaterial, and prejudicial since it would not provide the plaintiff an avenue to recover any additional damages. An arguable benefit to plaintiffs is that the Rule incentivized defendants to admit the employee/employer relationship such that no further proof was required of this relationship. \n\nThe Respondeat Superior Rule was first adopted in Georgia in 1967 by the Court of Appeals in \nWillis v. Hill\n, 116 Ga. App. 848, 853-868 (1967), rev’d on other grounds, \nHill v. Willis\n, 224 Ga. 263 (1968). As of November 2020, the Rule is no more after the Georgia Supreme Court held in \nQuynn v. Hulsey\n that Georgia’s 2005 enactment of sweeping tort reform legislation, and more specifically O.C.G.A. § 51-12-33 (the “apportionment statute”), abrogated the Respondeat Superior Rule:\n\n[T]he claims encompassed by the Respondeat Superior Rule are claims that the employer is at “fault” within the meaning of the apportionment statute. Adherence to the Respondeat Superior Rule would preclude the jury from apportioning fault to the employer for negligent entrustment, hiring, training, supervision, and retention. Any allocation of relative fault among those persons at fault, which may include the plaintiff, could differ if one person’s fault was excluded from consideration. It follows that the Respondeat Superior Rule is inconsistent with the plain language of the apportionment statute.\n\nId\n. at 729.\n\n	In reaching its decision, the Georgia Supreme Court rejected several arguments made in defense of the Rule. First, the employer argued that abrogating the Rule would undermine Georgia’s comparative negligence doctrine because evidence of whether an employer had negligently hired, trained, entrusted, or retained an employee was not relevant to whether the employee was negligent in causing the plaintiff’s injury. \nId\n. at 729. The Court rejected this argument finding instead that “[e]vidence tending to establish the employer’s fault would be of consequence to the determination of the action as the jury is required to consider the fault of ‘the persons who are liable’ and ‘all persons or entities who contributed to the alleged injury or damages.’” \nId\n. at 729-730 (quoting O.C.G.A. § 51-12-33 (b)-(c)).\n\n	The Court next rejected the employer’s argument that the Rule was not abrogated by the apportionment statute because claims against the employer are derivative of the claim for the employee’s tortious conduct. The Court held that “claims that an employer was negligent are divisible from claims that its employee was negligent, and so are capable of being assigned percentages of fault.” \nId\n. at 730. Similarly, the Court rejected the employer’s argument that it and its employee were ‘“working toward a common goal – the employer’s business’” such that fault from their concerted action was indivisible and not subject to apportionment. \nId\n. at 731. In rejecting this argument, the Court noted that the “acts of an employer in negligently entrusting, hiring, training, supervising, and retaining an employee are the independent acts of the employer separable from the actions of the employee, not necessarily a concerted act between an employer and its employee.” \nId\n. Lastly, the Georgia Supreme Court rejected the employer’s contention that the Georgia General Assembly did not intend to abrogate the Rule by enactment of the apportionment statute. \nId\n.\n\n	The practical effects of this recent opinion and significant change in Georgia law remain to be seen. At the very least, litigants and lawyers should expect an expansion of discovery relating to acts of the employer as well as spending time to pursue or defend the employer’s acts at trial. Time will tell whether the new admissibility of the employer’s acts in the hiring, training, supervising, or retaining of its employee will lead to increasing verdicts and affect the way juries apportion fault for an injury between employee and employer.\n

George T. Major, Jr.  

Recent Developments: The Georgia Supreme Court’s Recent Opinion Significantly Alters Employer Liability

Partner Drew Wilkes was a speaker at the 2021 Nuts & Bolts of Family Law seminar held (virtually) on February 25, 2021. Drew submitted written materials and spoke on the issue of Post-Judgment Modification Actions. The seminar was sponsored by the Family Law Section of the State Bar of Georgia. Drew devotes a substantial portion of his trial practice to representation of those with family law needs.  

Drew Wilkes Speaks at 2021 Nuts & Bolts of Family Law Seminar

Revocable Trusts and Wills are often sold to the public as analogous estate planning tools, capable of achieving various levels of creditor, tax and probate protection. The truth is that each vehicle offers unique advantages, and the selection of either or both as an estate planning tool should only be made after carefully considering the respective costs and benefits. Below is a basic discussion of the differences between Revocable Trusts and Wills as a method for disposing of property at death. \n\nThe creation of a Revocable Trust requires the re-titling of property in the name of the Trust. So, real property, vehicles, bank accounts, securities accounts, etc. must all be re-titled. The advantage is that any assets titled in the name of the Trust at the grantor’s death will not have to be “probated” to pass to the desired beneficiary. Rather, the beneficiary (perhaps a spouse or child) will have immediate access to the assets of the Trust. While a Will does not require re-titling of assets, the power of the Probate Court must be invoked at death in order to pass assets to the desired beneficiaries. This is not an overly complex or financially burdensome process in Georgia, but it will involve a delay compared to the passing of assets via a Revocable Trust. It should be noted, however, that any practitioner drafting a Revocable Trust will also draft a “safety net” will, to direct to the Trust assets the grantor may not have re-titled during life. It is sometimes the case that a single asset, such as a bank account or car, will require the probate of a Will even if a Revocable Trust was drafted and funded.\n\nIf all assets successfully pass through a Revocable Trust without the need for probate, there will be no public record of the Will. Confidentiality can sometimes be a desired benefit for those leaving property at death, and a Revocable Trust can accomplish this. Another concern often raised by those wishing to leave property at their death is potential challenges to their desired testamentary scheme. Both Revocable Trusts and Wills can be challenged in a court of law. However, those attempting to challenge a Will actually face a more difficult task than those seeking to set aside transfers to a Revocable Trust, because of the legal presumption in favor of permitting an individual to dispose of his assets via a Will.\n\nFor creditor and tax purposes, the property in a revocable trust is treated as being owned by the creator, or “grantor” of the trust.  This is so because the grantor can at any time prior to his or her death, “revoke” the trust and take the property back. Thus, revocable trusts do not offer unique tax benefits or creditor protection. Most common estate planning objectives achievable in a Revocable Trust may also be accomplished by a Will. ​\n\nAdditional benefits of Revocable Trusts may exist if the grantor is or may become disabled. Trusts can serve as a vehicle allowing a family member or institution to easily transition into managing the assets of a disabled individual.\n\nWhile a well drafted Will in Georgia can almost always accomplish the required estate planning objectives, a Revocable Trust may be the best option for individuals seeking heightened privacy or those with unique family situations.  An individual must weigh these benefits with the added complexity, necessary funding and cost of a Revocable Trust to determine if it is the best option. \n\nBryan A. Schivera is a partner in Oliver Maner’s tax and corporate department. He can be reached at bschivera@olivermaner.com or 912.236.3311.

Revocable Trusts and Wills in Georgia

“Never sign anything without letting your attorney review it first”. This is advice many in the business community have likely heard ad nauseam from their legal counsel. As business litigators can attest, it is also advice not always heeded. This was seen often after the real estate crash, where many deep pocketed individuals had personally guaranteed speculative real estate or business endeavors, only to be pursued vigorously upon their failure. While the danger of signing a personal guarantee is still fresh in the minds of the business community, individual liability arising out of a limited liability entity can still rear its ugly head.​\n\nIn June, the Georgia Court of Appeals issued another opinion confirming the dangers of signing any document without seeking legal advice. In Buffa v. Yellowbook Sales and Distributing Co., Inc., No. A14A0209, 2014 WL 2766746 (Ga. Ct. App.), a Georgia LLC was sued along with its manager in his individual capacity for failing to pay invoices under several service agreements. The trial court found the manager was individually liable for the debt, despite his argument that he only signed the agreements as a representative of the LLC. The Georgia Court of Appeals affirmed the trial court’s decision, finding that language within the agreement bound the manager individually.​\n\nSpecifically, the Court of Appeals focused on a clause within the agreements which indicated the manager had agreed to become personally liable for the debt. Clause 15F in the agreements provided the following: “The signer of this agreement does, by his execution personally and individually undertake and assume the full performance thereof including payments of amounts due thereunder.” Additionally, the signature blocks indicated personal liability for the manager: “This Is an Advertising Contract Between Yellow Book and [printed company name] and [signature] Authorized Signature Individually and for the Company (Read Clause 15F on reverse side).” \n\nThe manager was held individually liable for the full amount due, in addition to attorney fees and interest. It is likely the Court would have found Clause 15F to have bound the manager individually even if it had not been referenced in the signature block. The lesson is of course that every word in a contract – even one found in the 15th section – can be tremendously important.\n\n​Corporate lawyers always prefer the ease of counseling clients pre-transaction rather than litigating any subsequent fallout. Clients typically prefer the size of the bill, too, when they seek advice before signing on the dotted line.\n\nBryan A. Schivera is a partner in Oliver Maner’s tax and corporate department. He can be reached at bschivera@olivermaner.com or 912.236.3311.

Guarding Your John Hancock

Let’s face it: no one welcomes the idea of unexpected litigation, especially business owners. Lawsuits can cause stress and heartache, impact productivity, alter new business opportunities, and precipitate substantial and unexpected costs.  \n\nBut what if I told you there were ways small business owners could plan for legal action in a way that would minimize the risk of incurring those costs? There are a number of action items all small businesses may consider so as to be best prepared when litigation arises.  \n\nThese include:\n\nDefine your business’s legal structure. How is your business structured? Is it a corporation, meaning it is authorized to act as a single entity and recognized as such by the law? Or is it a partnership, a business operation between two or more people who share management and profits? The differences matter, as they affect your business’s legal obligations and therefore, the opportunities and drawbacks available to your business. For example, in a general partnership the partners assume responsibility for the partnership’s debts and other obligations. In a limited partnership, the general partners own and operate the business and assume liability while the limited partners serve only as investors. If you don’t know which one your small business is, or why it is structured the way it is, find out. \n\nDraft policies and procedures. Whether you have one employee or two hundred employees, it is wise to have clear policies and procedures in place. Without them, issues of critical importance to your company such as health and safety, legal liabilities, regulatory requirements, and others are left undefined–and this can have serious consequences when something goes wrong, whether it be an injury on the job or a non-fulfilled purchase order. \n\nTrust but verify! Miguel de Cervantes, the author of Don Quixote and creator of the character of the same name, is credited with saying, “An honest man’s word is as good as his bond.” While that may be true, proving the exact meaning of words said by someone (honest or otherwise) that weren’t written down is difficult, and leaves room for ambiguity that can lead to disputes down the road. Business owners should always try to get agreements and contracts in writing for every deal they make–even if it’s with people they trust! \n\nProtect your intellectual property. Last April, the Commission on the Theft of American Intellectual Property estimated annual costs from the loss of intellectual property ranges from $225 billion to $600 billion. As a business owner, consider obtaining confidentiality agreements with all employees as well as trademark registration for any applicable logos, names, and slogans unique to your business.\n\nCall your lawyer. It is always a good idea to have legal counsel review your business and its processes, both for your specific concerns, as well as for a general analysis. While there will be some upfront costs to doing so, catching mistakes early can alleviate significant financial and mental strains later.\n\nIn short, small business owners will be well served if they are organized and prepared, manage conflicts before they become full-blown disputes, and get help early. Spend some money now to save even more later.\n\nDavid Bobo Mullens, III, is an associate in Oliver Maner’s litigation department and specializes in business litigation, local government matters, and maritime and transportation law. He can be reached at dbmullens@olivermaner.com or 912.236.3311

David Bobo Mullens, III

Planning for Litigation: How Small Businesses Can Minimize Costs

In a community-focused city like Savannah, there are plenty of ways to give back. Whether supporting fundraisers or joining the boards of local nonprofits, the altruistic can fin a way to get involved. In an effort to do their part, three lawyers combine personal passions and legal expertise to give back both in their everyday jobs and in their free time.\n\nThe Helping Hand\n\nBill Hunter considers himself fortunate. “I’ve been tremendously blessed with my job and my family. You get old enough, and you realize how often we take that for granted,” he says. “But it’s not that way for everybody.” \n\nIn 2016, Hunter’s passion for helping the less fortunate led him to join the Board of Directors for Union Mission, Savannah’s leading organization for providing assistance to the homeless. \n\nThrough Hunter’s involvement, his firm Oliver Maner is a major sponsor for the Union Mission’s annual Raising Hope fundraiser. “Solving homelessness in Savannah couldn’t be more important,” Hunter says. “People simply want a little help getting back on their feet, and that’s what Union Mission does so well: it gives people the skills and training that will help them get a job.” \n\nAdditionally, Hunter does pro-bono work with Compassionate Release, an organization aimed at securing releases for the most vulnerable federal prisoners.\n\n“There’s always been a shortage of attorneys to handle these motions, but it took on a whole new importance and urgency with COVID-19,” Hunter says, noting that prisons often don’t have the resources to manage COVID outbreaks properly. “I’m happy to say we’ve gotten three people released.”\n\nWritten by Ariel Felton

Raising the Bar – How Local Lawyers Pay It Forward

In a recent article, we discussed using trusts in order to protect assets from creditors and predators; specifically, the limitations of protecting assets in Self-Settled Trusts. In this installment, more attention is devoted to the use of Third Party Trusts and other techniques to protect assets from creditors and predators.  \n\nGeorgia law seeks to strike a fair balance between the claims of creditors and the right of a person to leave his or her assets only to persons he or she chooses. As described in the previous installment, a Settlor cannot defeat his or her own creditors by transferring his or her assets to a Self-Settled Trust. However, in Third Party Trusts, the creditors of a beneficiary (who is not the Settlor) of such trust should not be able to seize assets which the beneficiary never directly owned and transferred.   \n\nWith respect to a Third Party Trust, a Settlor may, in general, dispose of his or her property as he or she sees fit in a manner which shields the property from the claims of the beneficiaries’ creditors. The property passing pursuant to a Third Party Trust was not originally the property of the beneficiary(ies) of such trust and, therefore, should not have to be available to pay the debts of the beneficiary(ies). The intent of the Settlor is paramount. If the Settlor does not wish for his or her property to be seized by the creditors of a third party beneficiary, then that intent generally will be respected if the instrument is properly drafted (because, in most circumstances, the Settlor has the right to benefit only the persons he or she chooses and has no duty or obligation to pay the debts of the beneficiary).  \n\nO.C.G.A. § 53-12-81 entitled Limitations on creditors’ rights to discretionary distributions provides in pertinent part:  “[a] transferee or creditor of a beneficiary shall not compel the Trustee to pay any amount that is payable only in the trustee’s discretion regardless of whether the trustee is also a beneficiary.” (Emphasis added.)  This Section does not apply to the extent, if any, that a proportion of the trust property is attributable to the beneficiary’s own contribution. To that extent, the beneficiary would be considered a Settlor. \n\nThus, if the Trustee has the sole discretion to determine whether a payment of income or principal may be made to a beneficiary and the Settlor is not the beneficiary, then the creditors of that beneficiary cannot reach the assets of the trust unless and until they are paid out to such beneficiary.  Even in a Third Party Trust, however, the creditors of a non-Settlor beneficiary can reach the income or principal if the debtor/beneficiary has an absolute right to receive the distribution (for example, if the Trust does not leave it in the Trustee’s discretion but rather requires that all income be paid to the beneficiary).  In that event, the creditors can reach the income whether or not it is actually distributed.  It should be noted again the interplay between the rights of creditors versus the right of a Settlor/decedent to leave property as he or she wishes:  under O.C.G.A. § 53-12-81, the provision does not apply to the extent the beneficiary made a contribution of property (or is a Settlor) to the Trust.    \n\nO.C.G.A. § 53-12-80(e) provides that:\n\n[a] provision in a trust instrument that a beneficiary’s interest shall terminate or become discretionary upon an attempt by the beneficiary to transfer it, an attempt by the beneficiary’s creditors to reach it, or upon the bankruptcy or receivership of the beneficiary shall be valid except to the extent of the proportion of the trust property attributable to such beneficiary’s contribution [i.e., to the extent the beneficiary becomes a Settlor].  \n\nIn other words, even if the payment of income is mandatory in a Third Party Trust, a provision may be included in the instrument to terminate the distributions or change them from mandatory to discretionary if a beneficiary’s creditor is looming.  In this case, the provision could give the Trustee the discretion to pay such distributions to the beneficiary’s spouse or children or to accumulate all or part of the income.  In any event, the creditor could not reach the trust property except to the extent actually paid to the debtor/beneficiary.   \n\nIf an individual does not wish to place assets in a trust for an extended period of time but is only concerned about attempting to thwart the claims of his or her own creditors and predators upon death, then under O.C.G.A. § 53-12-82 (3), the simple re-titling of assets or the naming of beneficiaries for assets may be sufficient to defeat the claims of a debtor’s own creditors.  This Section provides that “[p]ayments that would not be subject to the claims of a settlor’s creditors if made by way of beneficiary designation to persons other than the settlor’s estate shall not be made subject to such claims. . . . .”  O.C.G.A. § 53-12-82(3). This means that, in those instances where beneficiaries are named or “designated” (such as on insurance policies, retirement plans, annuities, transfer on death accounts, payable on death accounts, joint tenancy with right of survivorship accounts, etc.), the assets will not be in the decedent’s probate estate and will not, absent other circumstances, be subject to the claims of creditors of the deceased debtor.  It should be kept in mind that, notwithstanding the above, if one wishes to avail himself or herself of the above-described planning techniques, he or she should engage in the planning prior to incurring the subject liability.  \n\nAs will be discussed in more detail in a subsequent installment of this article, the person who makes the transfer of an asset (whether in trust, outright or by beneficiary designation) and desires to put it beyond the reach of his or her own creditors, must not run afoul of the UNIFORM VOIDABLE TRANSACTIONS ACT (the “Act”), O.C.G.A. 18-2-70 et. seq. (primarily §§18-2-74 and 18-2-75). In a nutshell, this Act provides that if a person (the transferor) transfers property to a donee by a gift or to a trust (or by beneficiary designation or retitling), with a specific intent of hindering or defeating a creditor, or if the transferor is rendered insolvent by the transfer, the transfer may be set aside by a court as a “voidable transfer” so the creditor can reach it. But, assuming one does not run afoul of this Act, assets transferred to a trust for a beneficiary receive a much broader level of protection against claims of that beneficiary’s creditors. Thus, the time for an individual to engage in planning to insulate assets from the claims of creditors, is before those creditors appear on the horizon, and while the transferor is solvent.\n\nDavid H. Dickey is a partner at Oliver Maner LLP and concentrates his practice in the areas of Estate Planning, Business Law, Business Entities, Probate & Estate Administration and Taxation. He can be reached by email at ddickey@olivermaner.com and by phone at 912.236.3311.\n\nRyan Beasley is an associate at Oliver Maner LLP and concentrates his practice in the areas of Estate Planning, Business Law, Business Entities, Probate & Estate Administration and Taxation. He can be reached at rbeasley@olivermaner.com and by phone at 912.236.3311.

David H. Dickey

Ryan Beasley

Use of Third Party Trusts, Other Techniques to Protect Assets from Creditors and Predators

Most employers understand that federal laws (the Civil Rights Act, the Equal Pay Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act and others) make it illegal to discriminate against employees on the basis of race, color, religion, sex, national origin, age, and disability. These prohibitions apply not only to workplace treatment but also to the hiring process. An employer sued for discriminatory hiring has a strong defense if it can prove that it was not aware of the candidate’s protected status when it made its hiring decision. Accordingly, conscientious employers try, where possible, to avoid learning protected demographic information in the screening process. For example, prudent employers avoid asking demographic questions such as age, race, gender, religious affiliation, etc. on employment application forms if such information is not required to evaluate candidates for a particular position.\n\nAt the same time, social media has become a ubiquitous and valuable tool that employers use to screen candidates for open positions. Social media often provides insight into candidates that employers simply cannot gain through written applications or even interviews. Unfortunately, in most instances, social media searches will also reveal demographic information about candidates that employers want to avoid. Accordingly, social media searches can create risks for employers that their hiring practices will be challenged as discriminatory. Further, the law is still developing concerning the degree of privacy individuals can reasonably expect with information placed on social media sites. \n\nSo how can employers protect themselves without abandoning the wealth of information that can be gleaned from social media? We have several recommendations. First, employers should assign someone who is not involved in the hiring decision to conduct social media searches of job candidates. The assigned screener can prepare a memo to the hiring officer(s) outlining useful, relevant information learned about each candidate and excluding protected demographic information. \n\nSecond, the screener should review only a candidate’s public profile to avoid allegations of invasion of privacy. It is clear that individuals do not have a reasonable expectation of privacy as to information they post publicly. However, it is less clear when information is shared unintentionally (e.g., by others in the candidate’s network or through the candidate’s online activities) or shared on a limited basis (e.g., only to friends or contacts). We recommend that employers do not send “friend requests” to candidates to gain access to additional information. A candidate could argue that, as a job seeker, he or she felt compelled to accept the request to avoid being eliminated from consideration.\n\nThird, employers should not rely exclusively on information learned through social media in their hiring decisions. Data suggests that the adoption and use of different social media platforms varies among different age groups. Thus, reliance solely on social media risks excluding certain age groups from the hiring process.\n\nFourth, if an employer relies on positive or negative social media information in its hiring decision, it should keep a record of the information found and the manner in which it impacted the hiring decision. That way, if a candidate later brings charges, the employer will have a contemporaneous record to show that its decision was based on relevant, non-discriminatory information.So far, we’ve explored the risks of relying on social media in the hiring process and how to mitigate those risks. Are there also risks in not searching social media sites as part of the hiring process? The law is clear that employers have a duty to act reasonably in their hiring decisions. An employer who hires an individual with a known history of dangerous, harassing or illegal conduct may be held liable for negligently hiring that individual if he or she later commits a similar act while on the job. \n\nAn employer’s concern is how broad its duty is to uncover a candidate’s past harmful conduct. We are not presently aware of any cases where an employer has been held liable for failing to uncover prior conduct information through social media. However, we can envision an employer being held liable if it does not conduct any social media searches when a cursory public search would have quickly revealed a candidate’s dangerous past. Accordingly, we recommend employers conduct searches of publicly available social media information so long as precautions are taken to mitigate risks of discrimination claims.\n\nLarry Evans practices in the litigation section of Oliver Maner LLP. He has extensive experience handling all aspects of commercial litigation including professional malpractice defense, financial services litigation, creditor’s rights, construction litigation, directors and officers liability, employment litigation and general business disputes. He can be reached at 912-236-3311 or levans@olivermaner.com.

T. Lawrence Evans  

Social Media and Discriminatory Hiring Practices: What Businesses Need to Know

As many of us move forward following the conclusion of this year’s tax season, many individuals and professionals continue to adjust to the major tax revisions approved by Congress in the Tax Cuts and Jobs Act of 2017 (TCJA) and signed into law by the President. The TCJA went into effect on January 1, 2018 and made substantial changes to the prior tax code.  Additional changes that impact divorce and separation instruments will occur beginning in 2019.  \n\nOne of the more publicized changes to the tax code relates to the tax treatment of alimony (spousal support).  Alimony (as defined in IRC Section 71) is not part of every divorce in Georgia, but is frequently awarded or agreed upon for purposes of providing support and maintenance to a former spouse.  Recent tax data reveals that approximately 600,000 Americans claimed alimony in their tax returns.   The revisions to the tax code relating to the treatment of alimony will have a material impact on the manner in which financial issues are negotiated and resolved attendant to a divorce \n\nPrior to the TCJA, payments meeting the definition of alimony were deductible from the gross income of the payor spouse and includible in the gross income of the recipient spouse.  Under the TCJA, alimony payments will no longer be deductible from the gross income of the payor spouse or includible in the gross income of the recipient spouse for divorce or separation instruments executed after December 31, 2018.   If the divorce or separation instrument is in effect before December 31, 2018, the tax treatment of alimony remains the same as it was before the enactment of the TCJA.  The elimination of the “alimony deduction” may have a far-reaching effect on all financial issues that have to be decided attendant to a divorce, including child support and property division.  \n\nThe tax changes present new challenges for divorcing spouses (and their lawyers) trying to plan for their future financial security.  The potential impact of the alimony changes can be illustrated as follows:  Under the pre-TCJA law, the wife earns $500,000 per year and is in the top tax bracket.  She is paying her husband $100,000 a year in alimony.  After deduction from her gross income, the $100,000 in alimony only costs her roughly $50,000.  Her husband will receive $100,000, but nets approximately $75,000 after taxes (assuming the husband is in a lower tax bracket).  Under the TCJA, the wife will argue that she can only afford $50,000 (the after-tax benefit cost to her under the previous tax code), and the husband would receive $25,000 less than the $75,000 under the previous tax code.\n\nAdditional regulations that impact the treatment of or further expand on alimony issues may be promulgated later this year with forthcoming clarifications by the IRS.  \n\nOther notable changes under the TCJA include changes to the Child Tax Credit.  Under the previous law, the child tax credit provided for a partially refundable $1,000 child tax credit for the first two children with income phase-out at $110,000 for married or joint filers.  Under TCJA, the tax credit increases to $2,000 for “qualifying children” (generally under age 17 at the end of the year).  The income phase-outs were increased to $400,000 for married or joint filers. \n\n529 savings plan accounts also became more flexible.  Under the previous tax code, the distributions were allowed only for qualified higher education (college). Under TCJA, distributions of up to $10,000 per student are allowed for tuition at public, private, or religious elementary or secondary schools.  These changes may impact child support and property allocation issues attendant to divorce.\n\nFor most divorce cases involving alimony, there will be an incentive to get divorce matters resolved before the close of 2018.  Likewise, although already a common practice amongst divorce lawyers, consultation with a qualified tax professional incident to a divorce becomes even more important given the new landscape that exists under the TCJA.\n\nAndrew M. Wilkes is a partner in the litigation section of Oliver Maner LLP and concentrates his practice in the areas of medical malpractice defense and family law/divorce. He can be reached by email at dwilkes@olivermaner.com and by phone at 912.236.3311.

Tax Cuts and Jobs Act: Impact on Divorcing Spouses

In this article, Mr. Dickey and Mr. Beasley address the use of limited liability companies (“LLC”) in estate planning and asset protection and important drafting tips for LLC governing documents to keep property beyond the reach of creditors.\n\nLLCs are best known for the favorable characteristics they take from the other types of entities.  In the most rudimentary sense, LLCs can combine the favorable liability protection from corporations with the often favorable tax treatment from partnerships.  \n\nLLCs are known as “pass through entities” meaning all of the profits and losses of the LLC pass through the business to the owners of the LLC, or “members.”  The LLC itself does not pay federal income tax.   If the LLC elects to be taxed as a partnership, the LLC will issue a Form 1065 K-1 to its members showing that member’s lawful share of the LLC’s profits and losses.  The members then report this information on their individual tax returns.  It is important to note that the LLC is not required to distribute profits to its members.  How distributions are handled is typically set out in the LLC’s governing document, or operating agreement.  Even if the LLC does not distribute the profits to its members, the members will be taxed on their share of those profits. This fact will become important later in the article in regards to charging orders.      \n\nBottom-Up Protection.  LLCs, like corporations, are legal entities, separate and distinct from the individuals who create and own them.  In that regard, just like the shareholders of a corporation cannot generally be held liable for the obligations of the corporation, the members of an LLC cannot generally be held liable for the obligations of the LLC.  There are obviously some exceptions to this general rule.  First, like the shareholder of a corporation, a member of an LLC will be liable up to the amount of his or her investment in the LLC.  Thus, any capital or property the member transfers to the LLC in exchange for his or her ownership stake in the LLC or “membership units” (similar to shares of stock of a corporation) is an asset of the LLC and therefore can be used to satisfy the claims of its creditors.  Another exception to the general rule, is when the members of the LLC do not observe the formalities of the entity and the formal separation between themselves and the entity, or the members commit fraud on the LLC’s creditors.  In these situations, a court could “pierce the corporate veil” and impose personal liability on the individual members.  However, assuming the members refrain from these kind of activities, the liability to creditors of the LLC is generally limited to the assets of the LLC.  This concept of protecting the members of the LLC from personal liability to the creditors of the LLC is known as “bottom-up” liability protection; in other words, the creditors cannot go above the entity to the owners to seek satisfaction of their claims.   \n\nLet us consider the example of an LLC that is the record title holder of a rental house.  Let us assume that Dick and Jane Members, a married couple, owned the house jointly, and each transferred their respective interest in the rental house to the LLC in exchange for 50% of the membership units of the LLC.  Now, let us assume that a guest of the tenant of the rental house was injured due to some construction defect of the rental house.  The only asset owned by the LLC is the rental house which has a fair market value of $150,000.  Dick and Jane both have personal assets outside of their respective LLC interest in excess of $1,000,000 each.  If the guest sues the LLC for his injury and is awarded a judgment of $500,000, he may very well be able to levy on the rental house itself because it is an asset of the LLC.  However, assuming Dick and Jane have not committed any of the kind of actions mentioned above, the guest plaintiff should not be able to go above the assets of the LLC to reach Dick and Jane’s personal wealth.  This is referred to as “bottom-up” protection.     \n\nTop-Down Protection.  Most people understand the concept of bottom-up protection, which is why so many people form LLCs.  However, consider the following example.  Let us assume that Dick is the sole member (100% owner) of an LLC that owns the same rental house described in the example above.  Dick’s personal wealth outside of the LLC interest is roughly $1,000,000.  Dick accidently lets his car insurance lapse and subsequently runs a red light, injuring another driver.  Driver sues Dick and is awarded a judgment in excess of $1,000,000.  Can plaintiff driver levy on the rental house in an attempt to satisfy his judgment even though the LLC is the record title holder of the rental house?  In other words, does Dick have “top-down” protection, preventing the creditor from levying on the LLC’s assets to satisfy his personal debt?   \n\nIn a case out of Florida, Olmstead v. FTC, the Florida Supreme Court held that the provision of the Florida Limited Liability Company Act providing a judgment creditor with the right to a “charging order” against the judgment debtor’s ownership interest in a single-member LLC was not intended to be an exclusive remedy and that the judgment creditor may pursue the standard remedy of levy and sale of the LLC’s underlying assets upon execution.  On the other hand, a charging order is an order issued by a court directing an LLC’s manager to pay to the debtor member’s personal creditor distributions of income or profits, if any, that would otherwise be distributed to the debtor member.  In coming to this decision the court reasoned that the charging-order provision must be understood within the context of the basic rule under Florida law that an assignee of an LLC interest (i.e. a creditor) may only become a member if all members other than the member assigning the interest consent.  \n\nThe limitation on assignee rights [under the Florida statute] has no application to the transfer of rights in a single-member LLC. In such an entity, the set of ‘all members other than the member assigning the interest’ is empty. Accordingly, an assignee of the membership interest of the sole member in a single-member LLC becomes a member—and takes the full right, title, and interest of the transferor—without the consent of anyone other than the transferor.   \n\nBecause the judgment creditor becomes a member and takes the sole member’s full rights, title and interest, he too takes the right to manage the LLC and to liquidate it and have access to the underlying assets.  To that point, the court held: \n\n[s]ection 608.433(4)'s provision that a ‘judgment creditor has only the rights of an assignee of [an LLC] interest’ simply acknowledges that a judgment creditor cannot defeat the rights of nondebtor members of an LLC to withhold consent to the transfer of management rights. The provision does not, however, support an interpretation which gives a judgment creditor of the sole owner of an LLC less extensive rights than the rights that are freely assignable by the judgment debtor.  \n\nAfter the Olmstead decision, the Florida Legislature later revised the statute to make clear that “a charging order is the sole and exclusive remedy by which a judgment creditor of a member . . . may satisfy a judgment from the judgment debtor’s interest in a limited liability company or rights to distributions from the limited liability company” for multiple-member LLCs.  § 605.0503(3), Fla. Stat. (2014).  Again, this is because the consent of all members is required for the admission of a new member (i.e. a creditor).  The revised statute did, however, preserve the court’s holding in regards to single member LLCs.      \n\nWhy is this case from Florida relevant?  Because it is conceivable that a Georgia court could reach the same conclusion.  The relevant Georgia statute is O.C.G.A. § 14-11-504, which, before a 2009 amendment, stated:  \n\n(a) On application to a court of competent jurisdiction by any judgment creditor of a member or of any assignee of a member, the court may charge the limited liability company interest of the member or such assignee with payment [from the debtor member’s share of income distributions, if any] of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the limited liability company interest [to receive any such distributions]. This chapter does not deprive any member of the benefit of any exemption laws applicable to his or her limited liability company interest.(b) The remedy conferred by this Code section shall not be deemed exclusive of others which may exist, including, without limitation, the right of a judgment creditor to reach the limited liability company interest of the member by process of garnishment served on the limited liability company.\n\n(Bracketed information added).  A court could easily apply the same equitable logic to the Georgia statute which also provides that consent of all the members of the LLC is needed to admit a new member to the LLC.   But, when the only member is the judgment debtor, there are no other members who have to consent to the creditor becoming a member.  And, if a court finds that a single member judgment debtor assigns all of his rights and interests in the LLC to his creditor, then it logically follows that said debtor also assigns his right to manage and to liquidate the LLC.  If such a decision were reached, then there is nothing to stop the judgment creditor, as the sole member and manager of the LLC, from forcing a liquidation sale of the LLC assets in order to satisfy his or her judgment.  \n\nThe 2009 amendment to the statute may make such a decision less likely.  The following proviso (the “proviso”) was added to the end of subsection (b) quoted above:  \n\n[E]xcept as otherwise provided in the articles of organization or a written operating agreement, a judgment creditor shall have no right under this chapter or any other state law to interfere with the management or force dissolution of a limited liability company or to seek an order of the court requiring a foreclosure sale of the limited liability company interest [nor would it allow the sale of the underlying assets of the LLC].  \n\nO.C.G.A. § 14-11-504(b)(bracketed information added).  However, although the proviso expressly gives the judgment creditor no right to interfere with management or force a foreclosure sale, it does not specifically address the situation described above – that a court could find in single-member LLC cases that the judgment creditor takes all of the rights (including management rights) of the single member debtor.  The bottom line is, without case law interpreting the proviso, a judgment creditor in Georgia may still have an argument as to why he or she can levy on the underlying assets or the membership units of a single-member LLC.    \n\nThus, in order to ensure “top-down” protection, it is a good idea in Georgia to have more than one member in an LLC.  If the LLC is a multi-member LLC, then the reasoning from Olmstead is moot.  O.C.G.A. § 14-11-308(b) states that unless otherwise provided in the articles of organization or a written operating agreement, the unanimous vote of the members is required to approve the following non-exhaustive list: dissolution of the LLC; the sale of all or substantially all of the assets of the LLC; and the admission of new members.  In the case of a multi-member LLC, one member (irrespective of how small of an interest such member owns) can prevent a judgment creditor from becoming a member, selling the assets of the LLC or dissolving the company.  This is a very powerful tool for top-down protection.  It is important to note however, that the terms of § 14-11-308(b) can be altered by a written operating agreement.  Therefore, when drafting an operating agreement for top-down protection, it is good practice to require unanimous consent for such matters.  Even without 14-11-308(b), however, multi-member LLCs would likely still be protected from judgment creditors under the proviso of 14-11-504(b).  Customized drafting could prove critical in the asset protection arena.\n\nThere are some drawbacks to forming a multi-member LLC.  Unlike single-member LLCs, Multi-member LLCs must file a separate tax return.  Again, the LLC does not pay federal taxes, but a separate return must be filed and K-1s issued to the members if the LLC elects to be taxed as a partnership for federal tax purposes.  This obviously adds extra administrative expense to the LLC, but, when considering the top-down protection it adds, it should be well worth it.  \n\nThe manner in which LLC members are taxed also provides a very powerful tool in protecting assets of the LLC.  As was mentioned above, O.C.G.A. § 14-11-504(a) gives a court the right to issue a charging order in favor of the judgment creditor to charge the LLC interest of the judgment debtor with payment of the unsatisfied amount from distributions, if any, made to the member.  In other words, the creditor, who is awarded a charging order, is entitled to the judgment debtor’s distributions from the LLC.  However, if the operating agreement is carefully drafted, the management of the LLC may not be required to make distributions to the members.  From the proviso, we know that at least in the case of a multi-member LLC, a judgment creditor has no right to interfere with management.  Therefore, the creditor cannot force a distribution to the members if the operating agreement gives management or all members the power to declare distributions.  And, as was mentioned above, the LLC will issue a Form 1065 K-1 to its members showing each member’s lawful share of the LLC’s profits and losses.  The members must report this information on their individual tax returns.  This is the case whether or not the LLC distributes the profits to the members.  Thus, imagine the situation where management of an LLC decides not to make any distributions of the profits, but the LLC issues a K-1 to a judgment creditor showing his or her share of the profits.  The judgment creditor must report the profits on his or her individual return and pay income tax on such amount.  Therefore, the judgment creditor may very well think twice before seeking a charging order if all it will render is an income tax bill with no accompanying distributions to pay it.  Again, this can be a very powerful tool, assuming the operating agreement is drafted in such a way that the management has discretion over the distributions (or all members, including any relatives in the debtor’s family who are also members of the LLC, must approve any distributions of profits).   \n\nLLCs can be powerful business and estate planning tools to provide bottom-up and top-down protection of assets.  However, when using LLCs for liability protection, one should consider the pitfalls that exist if the LLC is formed a certain way (single member versus multi member) or if the governing document of the LLC is not carefully custom drafted.  Bottom line: one should seek the advice and service of an experienced business attorney when considering the possibility of forming an LLC.       \n\nDavid H. Dickey is a partner at Oliver Maner LLP and concentrates his practice in the areas of Estate Planning, Business Law, Business Entities, Probate & Estate Administration and Taxation. He can be reached by email at ddickey@olivermaner.com and by phone at 912.236.3311.\n\nRyan Beasley is an associate at Oliver Maner LLP and concentrates his practice in the areas of Estate Planning, Business Law, Business Entities, Probate & Estate Administration and Taxation. He can be reached at rbeasley@olivermaner.com and by phone at 912.236.3311.

Limited Liability Companies: Drafting for Bottom-Up and Top-Down Liability  

In this article, attorney Ryan Beasley and I will address the issue of how trusts can be used to protect property from the claims of creditors and predators.\n\nProtecting Trust Property from the Claims of Creditors and Predators \n\nIn speaking of claims by creditors and predators against property held in trust, we normally hear about two major types of trusts, “Self-Settled Trusts” and “Third Party Trusts.”  \n\nSelf-Settled Trusts are trusts created where the Grantor (the person who creates the trust) is also a beneficiary of the trust.  A Third Party Trust, on the other hand, is one where the Grantor establishes a trust for beneficiaries other than himself or herself (for example, for his or her spouse, children, and/or other descendants).  Georgia law does not look kindly upon efforts of Settlors (the terms Settlor and Grantor are interchangeable) to defeat the claims of their own creditors by creating Self-Settled Trusts.  \n\nFor example, the Georgia Code states that “[during the lifetime of the settlor, the property of a revocable trust shall be subject to the claims of the settlor’s creditors.” O.C.G.A. § 53-12-82(1).  If the Settlor creates a Living Trust and makes it Irrevocable, the creditors of the Settlor may reach the “maximum amount that can be distributed to or for the settlor’s benefit during the settlor’s life or that could have been distributed to or for the settlor’s benefit immediately prior to the settlor’s death.” O.C.G.A. § 53-12-82(2). Thus, even if the property in a Self-Settled Trust is placed in the hands of an independent Trustee with discretion, but not any obligation, to pay the assets back to the Settlor, the creditors of the Settlor can still reach the maximum amount that the Trustee could, in the full exercise of his or her discretion, pay to the Settlor.  \n\nAfter the death of a Settlor, “the property of a trust that was revocable at the settlor’s death or had become irrevocable as the result of the settlor’s incapacity, shall be subject to the claims of the settlor’s creditors to the extent that the settlor’s probate estate is inadequate” to pay the debts. O.C.G.A. § 53-12-82(3). \n\nThus, it is very difficult for a Settlor to transfer his or her assets to a trust that is Revocable (or Irrevocable but provides lifetime benefits to the Settlor) and put those assets beyond the reach of his or her own creditors.  \n\nNote, however, that Georgia law is far more favorable to a debtor who is a beneficiary of a trust (i.e., a debtor/beneficiary) in the case where the beneficiaries of such trust do not include the Settlor.  Such trusts are called Third Party Trusts and include, for example, Testamentary Trusts that might be set up by a wife for her husband, children, and/or other descendants following her death. \n\nIn the next installment, we will explain in greater detail the Third Party Trust and the overlay of Georgia law as it balances the interest of creditors and the right of a person to leave his or her assets as he chooses.   \n\nDavid H. Dickey is a partner at Oliver Maner LLP and concentrates his practice in the areas of Estate Planning, Business Law, Business Entities, Probate & Estate Administration and Taxation. He can be reached by email at ddickey@olivermaner.com and by phone at 912.236.3311.\n\nRyan Beasley is an associate at Oliver Maner LLP and concentrates his practice in the areas of Estate Planning, Business Law, Business Entities, Probate & Estate Administration and Taxation. He can be reached at rbeasley@olivermaner.com and by phone at 912.236.3311.

Asset Protection through Trusts

Mr. Dickey and attorney Ryan Beasley address the issue of how trusts can be used to protect property from the claims of creditors and predators. (For purposes of this article, capitalized terms have the same meaning as in the prior installment of this article.)\n\nProtecting trust property from the claims of creditors and predators. In speaking of claims by creditors and predators against property held in trust, we normally hear about two major types of trusts, “Self-Settled Trusts” and “Third Party Trusts.”  \n\nSelf-Settled Trusts are trusts created where the Grantor (the person who creates the trust) is also a beneficiary of the trust.  A Third Party Trust, on the other hand, is one where the Grantor establishes a trust for beneficiaries other than himself or herself (for example, for his or her spouse, children, and/or other descendants).  Georgia law does not look kindly upon efforts of Settlors (the terms Settlor and Grantor are interchangeable) to defeat the claims of their own creditors by creating Self-Settled Trusts.  For example, the Georgia Code states that “[d]uring the lifetime of the settlor, the property of a revocable trust shall be subject to the claims of the settlor’s creditors.”  O.C.G.A. § 53-12-82(1).  If the Settlor creates a Living Trust and makes it Irrevocable, the creditors of the Settlor may reach the “maximum amount that can be distributed to or for the settlor’s benefit during the settlor’s life or that could have been distributed to or for the settlor’s benefit immediately prior to the settlor’s death.”  O.C.G.A. § 53-12-82(2).  Thus, even if the property in a Self-Settled Trust is placed in the hands of an independent Trustee with discretion, but not any obligation, to pay the assets back to the Settlor, the creditors of the Settlor can still reach the maximum amount that the Trustee could, in the full exercise of his or her discretion, pay to the Settlor.   \n\nAfter the death of a Settlor, “the property of a trust that was revocable at the settlor’s death or had become irrevocable as the result of the settlor’s incapacity, shall be subject to the claims of the settlor’s creditors to the extent that the settlor’s probate estate is inadequate” to pay the debts. O.C.G.A. § 53-12-82(3). \n\nThus, it is very difficult for a Settlor to transfer his or her assets to a trust which is Revocable (or Irrevocable but provides lifetime benefits to the Settlor) and put those assets beyond the reach of his or her own creditors.  \n\nNote, however, that Georgia law is far more favorable to a debtor who is a beneficiary of a trust (i.e., a debtor/beneficiary) in the case where the beneficiaries of such trust do not include the Settlor.  Such trusts are called Third Party Trusts and include, for example, Testamentary Trusts that might be set up by a wife for her husband, children, and/or other descendants following her death. \n\nGeorgia law seeks to strike a fair balance between the claims of creditors and the right of a person to leave his or her assets only to persons he or she chooses.  As described above, a Settlor cannot defeat his or her own creditors by transferring his or her assets to a Self-Settled Trust.  However, in Third Party Trusts, the creditors of a beneficiary (who is not the Settlor) of such trust should not be able to seize assets which the beneficiary never directly owned and transferred. \n\nWith respect to a Third Party Trust, a Settlor may, in general, dispose of his or her property as he or she sees fit in a manner which shields the property from the claims of the beneficiaries’ creditors.  The property passing pursuant to a Third Party Trust was not originally the property of the beneficiary(ies) of such trust and, therefore, should not have to be available to pay the debts of the beneficiary(ies).  The intent of the Settlor is paramount.  If the Settlor does not wish for his or her property to be seized by the creditors of a third party beneficiary, then that intent generally will be respected if the instrument is properly drafted (because, in most circumstances, the Settlor has the right to benefit only the persons he or she chooses and has no duty or obligation to pay the debts of the beneficiary).  \n\nO.C.G.A. § 53-12-81 entitled Limitations on creditors’ rights to discretionary distributions provides in pertinent part:  “[a] transferee or creditor of a beneficiary shall not compel the Trustee to pay any amount that is payable only in the trustee’s discretion regardless of whether the trustee is also a beneficiary.” (Emphasis added.)  This Section does not apply to the extent, if any, that a proportion of the trust property is attributable to the beneficiary’s own contribution. To that extent, the beneficiary would be considered a Settlor. \n\nThus, if the Trustee has the sole discretion to determine whether a payment of income or principal may be made to a beneficiary and the Settlor is not the beneficiary, then the creditors of that beneficiary cannot reach the assets of the trust unless and until they are paid out to such beneficiary.  Even in a Third Party Trust, however, the creditors of a non-Settlor beneficiary can reach the income or principal if the debtor/beneficiary has an absolute right to receive the distribution (for example, if the Trust does not leave it in the Trustee’s discretion but rather requires that all income be paid to the beneficiary).  In that event, the creditors can reach the income whether or not it is actually distributed.  It should be noted again the interplay between the rights of creditors versus the right of a Settlor/decedent to leave property as he or she wishes:  under O.C.G.A. § 53-12-81, the provision does not apply to the extent the beneficiary made a contribution of property (or is a Settlor) to the Trust.   \n\nO.C.G.A. § 53-12-80(e) provides that:\n\n[a] provision in a trust instrument that a beneficiary’s interest shall terminate or become discretionary upon an attempt by the beneficiary to transfer it, an attempt by the beneficiary’s creditors to reach it, or upon the bankruptcy or receivership of the beneficiary shall be valid except to the extent of the proportion of the trust property attributable to such beneficiary’s contribution [i.e., to the extent the beneficiary becomes a Settlor].  \n\n(Alteration to original.)   \n\nIn other words, even if the payment of income is mandatory in a Third Party Trust, a provision may be included in the instrument to terminate the distributions or change them from mandatory to discretionary if a beneficiary’s creditor is looming.  In this case, the provision could give the Trustee the discretion to pay such distributions to the beneficiary’s spouse or children or to accumulate all or part of the income.  In any event, the creditor could not reach the trust property except to the extent actually paid to the debtor/beneficiary.  \n\nIf an individual does not wish to place assets in a trust for an extended period of time but is only concerned about attempting to thwart the claims of his or her own creditors and predators upon death, then under O.C.G.A. § 53-12-82 (3), the simple re-titling of assets or the naming of beneficiaries for assets may be sufficient to defeat the claims of a debtor’s own creditors.  This Section provides that “[p]ayments that would not be subject to the claims of a settlor’s creditors if made by way of beneficiary designation to persons other than the settlor’s estate shall not be made subject to such claims. . . . .”  O.C.G.A. § 53-12-82(3). This means that, in those instances where beneficiaries are named or “designated” (such as on insurance policies, retirement plans, annuities, transfer on death accounts, payable on death accounts, joint tenancy with right of survivorship accounts, etc.), the assets will not be in the decedent’s probate estate and will not, absent other circumstances, be subject to the claims of creditors of the deceased debtor.  It should be kept in mind that, notwithstanding the above, if one wishes to avail himself or herself of the above-described planning techniques, he or she should engage in the planning prior to incurring the subject liability.  \n\nAs will be discussed in more detail in a subsequent installment of this article, the person who makes the transfer of an asset (whether in trust, outright or by beneficiary designation) and desires to put it beyond the reach of his or her own creditors, must not run afoul of the UNIFORM VOIDABLE TRANSACTIONS ACT (the “Act”), O.C.G.A. 18-2-70 et. seq. (primarily §§18-2-74 and 18-2-75). In a nutshell, this Act provides that if a person (the transferor) transfers property to a donee by a gift or to a trust (or by beneficiary designation or retitling), with a specific intent of hindering or defeating a creditor, or if the transferor is rendered insolvent by the transfer, the transfer may be set aside by a court as a “voidable transfer” so the creditor can reach it. But, assuming one does not run afoul of this Act, assets transferred to a trust for a beneficiary receive a much broader level of protection against claims of that beneficiary’s creditors. Thus, the time for an individual to engage in planning to insulate assets from the claims of creditors, is before those creditors appear on the horizon, and while the transferor is solvent.\n\nDavid H. Dickey is a partner at Oliver Maner LLP and concentrates his practice in the areas of Estate Planning, Business Law, Business Entities, Probate & Estate Administration and Taxation. He can be reached by email at ddickey@olivermaner.com and by phone at 912.236.3311.\n\nRyan Beasley is an associate at Oliver Maner LLP and concentrates his practice in the areas of Estate Planning, Business Law, Business Entities, Probate & Estate Administration and Taxation. He can be reached at rbeasley@olivermaner.com and by phone at 912.236.3311.

Non-Tax Uses of Trusts

As I prepared to write this piece, my 14-year-old son was required to undergo knee surgery at Augusta's Children’s Hospital. The complicated (and lengthy) pre-op process was a reminder of the multi-faceted challenges we face related to COVID-19, especially when considering reinitiating jury trials across our State.\n\nLet me explain.\n\nThe specimen from my son’s mandatory COVID-19 test was mistakenly sent to the “slow” lab instead of the one used for pre-surgical patients. After a delay, which included a new test and several hours waiting for the results, the surgery was successfully performed. \n\nNo matter one’s age and health, the personal, professional and societal implications of contracting COVID-19 can be daunting. It is also affecting a matter of much greater significance — the efficient administration of justice.  \n\nEach person asked to serve on a jury in the coming months will undoubtedly ask two basic questions: What are the risks? And, is it worth the risk to report to jury duty?   \n\nHow do we convince prospective jurors — all of whom will have the same thoughts that I did in that waiting room — that we can keep them safe and that their service is “worth the risk”?\n\nThis quandary has been evident in every decision made thus far by Chief Justice Harold D. Melton and the Supreme Court of Georgia,which recently issued a new judicial emergency order prohibiting any trials until at least Feb. 7. \n\nChief Justice Melton has made it clear that while business will eventually proceed, it will not be “business as usual.”   \n\nThe business of the courts shall only be conducted in a safe manner following Centers for Disease Control (CDC) guidelines. Every court in the state has submitted a provisional plan outlining how that court will re-engage in seating jurors for trials while making sure that every juror feels safe.  \n\nWhen we tell prospective jurors that they are safe and that their service is worth it, we have to be right.  And getting it “right” could not be more important.   \n\nJury trials in civil cases have been mandated since 1791 through the Seventh Amendment to the U.S. Constitution. In fact, Americans who were seeking independence from British rule served on colonial juries as a way to govern themselves.\n\nThus, it is no small thing when our courts cease operation of the most fundamental guaranteed right of procedure in our justice system. This is especially true now. \n\nIt is imperative that those who feel aggrieved, and those who have been accused, have their Constitutional rights to a timely jury trial through a fair process.   \n\nThese are big questions with no clear answers and known and unknown obstacles in our path.   \n\nAnyone who receives a jury summons in the coming months can believe that the judges and lawyers in this State are cognizant of their thoughts and fears and are taking every conceivable action to address them.  We can have faith that Chief Justice Melton and the other justices are thoughtfully negotiating what is one of the most intricate balancing acts our justice system has faced.    \n\nThere are going to be more bumps in the road which require our patience and cooperation. However, jury trials must soon again become a reality throughout our country. Our entire system of justice depends on it.   \n\nThis is an op-ed by lawyer William J. Hunter, a partner at the Savannah law firm of Oliver Maner LLP. He is a member of the American Board of Trial Advocates, an organization devoted to protecting the Seventh Amendment right to civil trial by jury for Americans.\n

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