12.11.08
Fraud in Divorce
Many people might be aware of the Fraudulent Transfer Act. It basically says, “If you transfer assets in order to avoid creditors’ claims, you’re committing fraud and the person that receives your assets must disgorge them.” Under a recent Michigan Supreme Court ruling (Estes v. Titus), the Act now applies to divorce: If you get a divorce (presumably, a pretty friendly one) and give your spouse most of the assets with the intent that your creditors can’t get much, your spouse can be sued and forced to disgorge the assets.
In these troubled times, it seems to me that the arm of the Fraudulent Transfer Act is growing longer and stronger. If you have creditors on the horizon, tread carefully if you plan to start divesting yourself of assets.
