It is not uncommon for a spouse to transfer all or a portion of his marital residence to the other spouse, whether it be for estate planning purposes or otherwise. If there becomes a creditor problem later for the spouse that made the transfer, there may be a challenge to the prior transfer claiming that it was a fraudulent transfer. A fraudulent transfer is a specific term in New Hampshire under the Uniform Fraudulent Transfer Act, RSA 545-A. Certain transfers are deemed fraudulent and therefore are voidable for the protection of creditors even if the transfer was done with no plan to hinder, delay or defraud creditors. If the asset transfer was done at time the transferor was insolvent or became insolvent because of the transfer, it is possible the transfer could be avoided under fraudulent transfer law, even if it was done in good faith with no fraudulent intent.
However, an important point is that a transfer can only be a fraudulent transfer under the New Hampshire Uniform Fraudulent Transfer Act to the extent that the value of the property transferred was above the mortgage on the property and the New Hampshire homestead exemption under RSA 480:1, which is an exemption up to $100,000 in your residence. A husband residing in his house worth $250,000 which has a mortgage of $160,000 therefore has $90,000 of equity. That $90,000 in equity is subject to the $100,000 homestead exemption under New Hampshire law. If that husband transfers title of the residence to his wife and he remains residing in his residence, the transfer should not be successfully challengeable under the Uniform Fraudulent Transfer Act. However if he was to file for bankruptcy, the transfer may be challengeable under the United States Bankruptcy Code.
J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].