In Georgia, a transfer to a relative other than a spouse is not presumed fraudulent, but once other badges of fraud are proved, courts look closely.
Relatives Are Insiders
One factor in deciding whether a transfer was made with actual intent to hinder, delay, or defraud any creditor is whether it “was to an insider,” OCGA 18-2-74(b)(1). An individual’s insiders include “[a] relative of the debtor,” OCGA 18-2-71(8)(A)(i), meaning anyone related “within the third degree as determined by the common law,” such as parents, children, siblings, aunts, uncles, nieces, and nephews, plus a spouse and a spouse’s relatives within the same degree, OCGA 18-2-71(14).
Spouses are different. When a transaction between husband and wife “is attacked for fraud by the creditors of either,” OCGA 19-3-10 puts “the onus … on the husband and wife to show that the transaction was fair.”
Relationship Alone Is Not Enough
In Milligan v. Milligan, 209 Ga. 14 (1952), a former wife sued to cancel her ex-husband’s deed to his sister, dated the day they separated. The Georgia Supreme Court held the relationship “would raise no presumption of fact as to fraud” and ordered a new trial because the defendants, having offered no evidence, were wrongly denied the right to open and close the argument. At the retrial, there was testimony that the sister had told him that if he deeded his interest to her, “his wife could not recover it for alimony.” The jury again canceled the deed, and in Milligan v. Milligan, 209 Ga. 743 (1953), the Supreme Court affirmed, explaining that close scrutiny does not apply until badges of fraud other than relationship are proved.
Who Counts as Close
In Moore v. Moore, 281 Ga. 81 (2006), the Georgia Supreme Court said “[e]vidence of a close relationship is relevant in determining the level of scrutiny,” naming in-laws, uncles, aunts, nieces, nephews, attorneys, and clients, and it treated a husband’s affair the same way.
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This post is a quick overview of the law and is not intended as legal advice. Please feel free to contact our office for a consultation if you have questions about this or any other legal aspects regarding your case!