By: William J. Burke
Can the creditor of one spouse reach funds in the spouses’ joint account to satisfy the debt? A Delaware County Pennsylvania judge said “yes” in a recent case, Gross v. Laver. Although property jointly held by husband and wife as entireties property, including cash in joint bank accounts, cannot usually be reached to satisfy the debts of only one spouse, the Court held that transfers of money into their bank account over a period of time were “fraudulent” under the Pennsylvania Uniform Fraudulent Transfer Act.
The husband – had his paycheck from his medical practice direct-deposited into an entireties joint bank account, from which disbursements were made for various expenses, including ordinary living expenses and mortgage payments. However, there were many disbursements for other expenses, including substantial expenses for maintaining a number of horses (about $48,000/year), gift of a car to the couple’s daughter, and other expenses associated with the continuation of an affluent lifestyle. The Court considered the amount of funds deposited into the account and what that money was used to pay for, and also considered the duties and services performed by the wife (who did not work outside the home). The Court concluded that there was no reasonably equivalent value received in exchange for the substantial transfers into the joint account, and ordered both husband and wife to pay the judgment. The case is on appeal.
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