Fraudulent Conveyance
In divorce law in Georgia sometimes a spouse will try to convey (give away or sell) property such as a home or stock, or the rights to a patent, or any piece of property, to keep it from their spouse should they ever divorce.
Often this sale of property will be to a family member or friend. When such a conveyance is made to default a creditor (and under Georgia law, your spouse is considered a creditor to the marital estate), this is called a fraudulent conveyance, and it creates a voidable transaction.
Under Georgia law, O.C.G.A. 18-2-74, when a conveyance of property is made (such as a home, real property, intellectual property, stock, rights to stock, etc.) with the actual intent to hinder, delay or defraud any creditor or debtor, the transaction becomes voidable. Your husband or wife is considered a creditor under the statute, so this statute becomes relevant in any Complaint for Divorce.
Sometimes it is obvious, other times less so, whether the transaction can be considered fraudulent. For example, a recent case I have involved the marital home that is titled in the husband’s name with a mortgage on it. During the marriage, the husband gave the title of the home to his mother through a quit claim deed. His wife claims this is a fraudulent transaction because it defrauded her out of her marital interest in the home.
However, the husband’s mother also paid off three-fourths of the mortgage on the house, sending money from India each month over a three year period. The husband alleges his wife was aware of this. Furthermore, he alleges that the mother would not have paid off the mortgage without the title being transferred to her.
The wife filed for divorce. She alleges that the transfer of the home to her mother-in-law is fraudulent and should be voided. So is it a fraudulent transaction?
Both sides will argue that at trial (scheduled in a few months). I represent the husband. Our position is that it is not a fraudulent transaction because (1) there was no actual intent to hinder, delay, or defraud the wife; and (2) value was received because the mother-in-law paid off the mortgage, giving both spouses a rent-free place to raise their children as long as they stayed married.
Absent any actual element of intent in this case, and since equivalent value was exchanged for the property (paying the mortgage), there was no fraudulent transfer under O.C.G.A. 18-2-74. Those are the elements I expect to argue at trial.
If you want to protect yourself from a claim of fraudulent transfer of property, goods, or rights, or make a transfer and not have it found later to be fraudulent, you need to act immediately and speak to an attorney who has in-depth knowledge of this topic. Don’t wait for years to pass. Get it resolved now.
Scott Shaw is founder and principal of Shaw Law Firm PC, founded in 1995 and dedicated solely to divorce, family law and child custody matters that must be addressed and decided in the state of Georgia. Shaw Law Firm has offices in Dunwoody/Sandy Springs and serves the greater Metro Atlanta area, particularly the counties of Fulton, DeKalb, Gwinnett, Cobb, Cherokee, Forsyth, Paulding, Henry, Fayette, Coweta, Newton, Walton, Bartow and Douglas. Schedule a consultation today or call us at 770-594-8309.