The house belongs to my spouse! – but does it really?
By Simon Abraham
8 December 2015
Many business people and professionals have moved their family home into the name of their husband or wife. Does that keep it safe from creditors in the event that unforeseen circumstances give rise to bankruptcy? No! A spousal transfer, typically done for “natural love and affection”, whilst exempt from stamp duty, may not even be worth the paper it is written on.
Our firm does work for Trustees in bankruptcy and one of the biggest traps for young players is the mistaken belief that because a property is transferred into the name of a husband or wife it keeps it “safe” from creditors and trustees in bankruptcy.
Sections 120 and 121 of the Bankruptcy Act allows trustees in bankruptcy to claim back property (including real estate, shares and other assets) that is transferred at less than market value or with the intention of defeating creditors.
Transferring a share in a family home for a token sum or for “natural love and affection” to a spouse within five (5) years of bankruptcy will likely be void.
If you or someone you know is facing potential bankruptcy or you would simply like a review of your family’s asset position in the event of an unknown future contingency, please come and see us. We will ‘stress test’ your existing asset protection position with a view towards ensuring your family is protected to the maximum extent that it is legally possible to do so.