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Is Your Spouse Guilty of Fraudulent Conveyance?

Trusts are asset protection devices that may be used by individual spouses who wish to protect separate assets upon divorce. Although trusts may be effective alternatives to prenuptial agreements, certain legal procedures must be adhered to in order to ensure the legal validity of a trust. Additionally, although trusts may be used by individuals to protect the integrity of separate or non-marital assets upon divorce in Georgia, it is important to note that a spouse who attempts to hide or shield marital assets in trust for the purposes of disadvantaging his or her spouse may be guilty of fraudulent conveyance.

According to Georgia's Uniform Fraudulent Transfers Act, a fraudulent conveyance may be found if the spouse who transferred assets into a trust did so "With actual intent to hinder, delay, or defraud [the other spouse]." See O.C.G.A. § 18-2-74 (a)(1). In determining whether a spouse had the requisite intent to defraud necessary for a finding that a fraudulent conveyance has been made, the court determines factors such as whether:

(1) The transfer or obligation was to an insider;

(2) The debtor (transferring spouse) retained possession or control of the property transferred after the transfer;

(3) The transfer or obligation was disclosed or concealed;

(4) Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;

(5) The transfer was of substantially all the debtor's assets;

(6) The debtor absconded; [or whether]

(7) The debtor removed or concealed assets […].

O.C.G.A. § 18-2-74 (b).

If a court determines that a spouse has committed a fraudulent conveyance, the court may invalidate or terminate the trust, thus allowing the disadvantaged spouse to make claims against or attach the trust assets for the purposes of equitable distribution and alimony. See O.C.G.A. §18-2-77.

If you are going through the divorce process in Georgia, and you have recently discovered that your spouse has transferred a significant portion of your marital assets or property into a trust, or that your spouse has made other transfers of marital property without your knowledge or consent, it is imperative that you ensure your attorney has the financial know how to effectively vindicate your interests during your divorce. If you are unsure whether your attorney has the tools or experience necessary to handle your financial complex divorce matter, contact our team of Atlanta divorce professionals today.


Asset Division
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