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HOW NOT TO PROTECT ASSETS
TRANSFERRING ASSETS TO A SPOUSE
"I don’t need asset protection. Last year, I
transferred everything to my wife."
Bad strategy. The transfer of assets to a spouse is usually not effective.
If the transfer of assets to a spouse leaves you with insufficient assets
to satisfy a judgment, you are rendered legally insolvent. Such a transfer
can easily be undone by a creditor as a constructive fraudulent
conveyance.
In addition, the
assets are still at risk should your spouse end up with claims against her
or him.
In the event the
marriage terminates, your spouse may walk off with the assets.
Finally, the transfer to the spouse must have occurred years in advance of
a claim by a creditor, lest the transfer be challenged as a
fraudulent conveyance.
Courts have the ability to look back in time for six years and undo
fraudulent transfers. Thus, a husband sued this year must have transferred
the assets to his wife at least six years ago.
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