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How Divorce Settlement Agreements may lead to Voidable Transfers

If you are a creditor, you may not know that assets transferred in divorce settlements can be considered voidable transfers. The court can either reverse the transfer or enter a judgement against the spouse receiving the transferred property.

Under the Uniform Voidable Transactions Act (UVTA), previously known as the Uniform Fraudulent Transfers Act (UFTA), a transfer may be fraudulent or voidable if the debtor made the transfer with intent to hinder, delay, or defraud any creditor of the debtor, or without receiving a reasonably equivalent value for the transferred property.

In a recent case, the Georgia Court of Appeals determined that a divorce settlement transferring assets could be considered a voidable transfer. In Enlow v. Enlow, 352 Ga.App. 865 (2019) a minor threatened to sue her grandfather for molestation. Twelve days later, the grandfather transferred five parcels of real property in a trust, previously held by him and his wife, solely to his wife. A month later, the couple filed for divorce, and the grandfather deeded all five parcels to the grandmother in the divorce settlement. This settlement was approved by the trial court.

The minor brought action against the grandfather and asserted the transfer of real property contained in the grandfather’s divorce decree was voidable. The trial court initially determined the UVTA did not apply to court-approved divorce decrees. The granddaughter appealed.

The Georgia Court of Appeals held assets transferred in divorce decrees are not immune to voidable transfer analysis.

If you are a creditor, and a debtor transferred assets to a family member, the experienced Atlanta collections attorneys at Poole Huffman, LLC are here to help. Put the power of our attorneys’ skills and experience to work for you. Contact us online or by calling (404) 373-4008 to schedule your confidential consultation.

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