Judgment Creditors, Resulting Trusts, and the Matrimonial Home

Abstract

One often finds that a person in business puts the title to the family home only in the name of the other spouse, rather than holding it in joint title. The hope is that the house will remain safe from his creditors if he cannot pay his business debts. This can backfire for a variety of reasons, particularly if the spouses later separate. One situation in which it will fail to provide protection is when unpaid debts were already looming at the time the transfer occurred. If such a transfer of ownership is done with the intent of defeating creditors, it can be deemed to be a fraudulent conveyance and set aside by a court as void against creditors. Putting the house in only one name does sometimes offer protection, but it should be approached with careful planning.