If a debtor transfers money he owns in his own name to an entireties account after or shortly before a creditor obtains a civil judgment the conveyance to the entireties account likely will be challenged as a fraudulent transfer. One of my asset protection clients proposed a creative way to transfer money owned in own name to an entireties account using the homestead exemption.
Here’s what the client proposed. After he gets a firm contract to sell his homestead the client plans to take almost all the money in his separate bank account and pay down his homestead mortgage. Paying off a mortgage cannot be reversed as a fraudulent conversion in almost all cases. The client and his wife will rent someone else’s home and not purchase their own new homestead property. The client will deposit all of his homestead proceeds from the sale of his wholly owned homestead into he and his wife’s joint bank account.