Collection of Fraudulent Transfers Made to a Spouse in the State of Florida

Often a creditor, in the attempt to collect on a judgment will find the judgment debtor has placed some or all assets into a joint bank account held with the judgment debtor’s spouse or the assets have been transferred in some way to a spouse.   This may seem like a lost cause, but our recent experience has proven otherwise.

In Florida, under the Uniform Fraudulent Transfer Statute, transfers made to a spouse within 4 years of the transfer may result in a judgment against the judgment debtor’s spouse for the amounts transferred. To pursue the claim against the Spouse, the judgment creditor may either bring a separate action against the spouse who received the Fraudulent Transfer of assets or may use the Proceedings Supplementary Statute at 56.29 Florida statutes to execute on the existing Judgment.

The Florida Uniform Fraudulent Transfer Statutes at Chapter 726 defines a transfer as “every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and included payment of money, release, lease, and creation of a lien or other encumbrance.”  This broad definition gives creditors extreme latitude in discovering and suing for transfers to a spouse. The definition would likely include, movement of assets into a bank account solely held by the spouse, paying for “stuff” which the debtor states is exclusively owned by the spouse, paying the spouse a salary for work not performed, and giving the spouse property of any kind which the spouse did not earn in any way.   These fraudulent transfers will also occur if the judgment debtor transfers individual assets into jointly held property.

Debtors are clever in disguising their transfers. Other clever means of moving assets to the spouse include having the spouse own the shares of the company run, managed and controlled by the judgment debtor. The Spouse may receive a large salary for doing clerical work for the company along with stock payment distributions. This type of arrangement is difficult to spot due to the fact that judgment debtor will defend the quality and quantity of work of the spouse. What gives the judgment debtor away in this instance is the small salary paid to the judgment debtor for doing most if not all work for the company. Such an arrangement is actionable as a fraudulent transfer and can be pursued against the spouse.

Once the transfer exists, the determination as to whether it is fraudulent is defined by Florida Statutes Chapter 726. These sections make fraudulent transfers fairly easy to prove when they are made by the Judgment Debtor to the spouse after the Debtor knows there is a pending collections claim.

The creativity in disguising fraudulent transfers never ceases to amaze the attorneys at Wetherington Hamilton, P.A.   With technology making transfers of money easier every day, the type fraudulent transfer will also expand.  Our hope is that you will decide to pursue these claims to ensure that this type of activity is limited in the future.

Theodore J Hamilton, Esq.

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