If the wife sells her home she had before she got married and uses some of the money to pay down debt for her spouse, and then is charged with a federal crime later and ordered to pay restitution. Can those spouses assets be seized to pay her restitution?
Country relating to Question: United States
Thank you for your question.Usually not. There is an interplay of Marital Property law and criminal law and fraudulent transfers (formerly called fraudulent conveyances) law in your questions.Pre-marital property AND the money from its sale ("proceeds") stays sole and separate property until and unless something happens to clearly "transmute" it into marital property, or even into the OTHER spouse's sole and separate property. Using proceeds to pay down on a joint property house, or a vehicle titled in both names, would make it marital property (absent a written agreement to NOT transmute the proceeds). Using proceeds to buy a car titled solely in the other spouse's name would be a transmutation into sole and separate property by gift. Using proceeds to pay down the other's sole and separate property DEBT would be transmutation by gift, with that expenditure either resulting in no asset owned (unsecured, like credit card, debt), or in a proportion of a secured asset (house or car that was financed) being sole and separate property owned by that other spouse.Under criminal law, normally the only sources from which Restitution can be ordered (they rarely say "sell *this* to pay it off") are assets that the convicted person owns at the time. Courts don't want to chase people who received expensive birthday gifts from the soon-to-be convicted felon in the year before conviction, for example. There are exceptions which apply if the recipient *knew* of the criminal activities and their financial booty being how their "friend" could afford to give them that Cadillac, but that is quite rare.Another exception can come into play IF the wrongdoer KNEW about the liability or potential liability AND either gave away much higher dollar values than normal, or sold very, very expensive things to relatives, friends or business associates for far, far below market value. Even then, it is usually necessary to also prove that the gift or un-natural bargain sale was part of a scheme to "hinder, delay or defraud" known or known potential creditors.It is sort of a "sliding scale" thing--the more unusual the financial actions, both in timing and dollar value, the more likely it is that someone would care and try to un-wind the transaction or gift. Because the law is reluctant to disturb the status quo of otherwise uninvolved parties, there are obstacles to chasing assets and recovering them from third parties, AND no "bright-line" rules of X number of the 17 or so "badges of Fraud" equaling a finding of fraudulent transfer.Thank you.BAB.
Twelve years of experience in estate planning and probate, consumer bankruptcy, and business law.
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