Does Moving Assets Under One Spouse Protect Your Assets?

If you are married and only one spouse has been sued, you cannot move the assets from one spouse to another in order to protect them. Such a transfer is considered a fraudulent conveyance.

However, if assets are currently owned jointly as tenancts by entireties, then a transfer into one spouse’s name would be allowed.

Understanding Tenancy by the Entireties in Florida

One of the most important legal concepts for married couples in Florida is tenancy by the entireties. This is a special form of joint ownership available only to married couples, and it provides unique protection from creditors. When assets are owned as tenancy by the entireties, they are considered to be owned by the marital unit as a whole, rather than by each spouse individually. This means that if only one spouse is sued, the creditors cannot reach assets held in tenancy by the entireties to satisfy the debt.

Assets that can be titled under tenancy by the entireties include real estate, bank accounts, and even certain personal property. As long as the asset was acquired during the marriage and is held in both spouses’ names, it may qualify for this protection.

However, this protection is limited. If both spouses are liable for a debt—such as a joint credit card or mortgage—the creditor can still pursue assets held in tenancy by the entireties. Additionally, not all assets can be easily retitled to take advantage of this form of ownership.

Transferring Assets to a Spouse:

Transferring assets into one spouse’s name to protect them from creditors might seem like a straightforward solution, but it doesn’t work. If a creditor sees that you transferred assets to your spouse shortly before a lawsuit or other legal action, they can claim that the transfer was fraudulent. Florida’s Uniform Fraudulent Transfer Act (UFTA) allows creditors to challenge transfers that were made with the intent to hinder, delay, or defraud creditors. Even if the transfer was made in good faith, the timing and circumstances could lead to the reversal of the transaction.

Moreover, simply moving assets to your spouse may not protect those assets in the long run. If your spouse is later sued or incurs their own financial liabilities, the assets in their name could be vulnerable to their creditors. In many cases, couples may think they’re safeguarding their wealth, only to discover that they’ve inadvertently exposed it to new risks.

The Impact of Marital Status and Divorce

Moving assets under one spouse to protect them can also backfire in a divorce. Florida is an equitable distribution state, meaning that marital assets are divided fairly—though not necessarily equally—between spouses during a divorce. Assets transferred into one spouse’s name could still be considered marital property, especially if they were acquired during the marriage or used for the benefit of both spouses.

In some cases, couples who transfer assets to one spouse may find that they are unintentionally contributing to a complicated divorce settlement. If the marriage dissolves, those assets might not be as protected as initially intended.

Alternatives to Moving Assets to a Spouse

Because moving assets to one spouse does not offer the level of protection you’re looking for, you should consider other strategies that may be more effective. Consider the following alternatives:

• Offshore Trusts: These trusts are specifically designed to shield assets from creditors. By placing assets into an offshore trust, they are no longer legally owned by you or your spouse, and the assets can be located outside of the jurisdiction of U.S. courts and judges.
• LLCs and Business Entities: Assets held in a multi-member LLC are mostly protected from creditors of the LLC member. The creditor is limited to a charging lien on profit distributions from the company.
• Retirement Accounts: Florida law provides strong protections for certain retirement accounts, including IRAs and 401(k)s. These accounts are exempt from creditor claims.
• Selling an Asset. A sale of an asset, even to a spouse, cannot be unwound as a fraudulent conveyance if it is sold for reasonably equivalent value.