I have cordial professional relationships with a few creditor attorneys. Sometimes, a creditor attorney who is representing a debtor client invents interesting asset protection strategies.Mr. Larry Kosto of Orlando, Florida, is one Florida’s best collection attorneys. Larry says that he represented a debtor who owned assets jointly with his spouse which assets, for one reason or another, could not be deemed protected tenants by entireties assets. He came up with an interesting plan to transfer the joint assets to the non-debtor spouse and avoid fraudulent conveyance.
Although the joint assets could not legally qualify as tenants by entireties assets either spouse, individually, had the right to convey the entire asset. Mr. Kosto suggested that the non-debtor spouse initiate the conveyance to her own name without the joinder of the debtor spouse. Mr. Kosto argues that fraudulent conveyance statutes specifically refer to transfers by “the debtor” of non-exempt assets to other people. In his case, since the debtor did nothing to accomplish or implement the transfer (at least, directly) Mr. Kosto argues that the creditor cannot fit the non-debtor spouse’s actions within the statutory definition of a fraudulent conveyance. A creditor may argue that the non-debtor spouse was acting as the agent or even the alter-ego of the debtor in making a transfer with the debtor’s knowledge and consent. I don’t know of any court decisions addressing this strategy.
Last updated on May 22, 2020