Debts and Marital Property

For those of you in my Introduction to US Law class, a recent story in the international press may have caught your eye and made you think. Former Lehman Brothers CEO Richard Fuld apparently "sold" his $13.3 million Florida home to his wife for $100 (or $10 depending on the news story you read). Why would he do that? Isn't it still a marital asset that can be claimed by a creditor? Based upon what we discussed in class, the answer is yes, but as a technical matter the answer is no for a variety of reasons. First, as a general matter, marital debt is shared just as marital assets are. But if shareholders of Lehman obtain a judgement for money against the former CEO, this debt could be considered personal to Fuld alone, not a marital debt. Thus, by transferring the home into his wife's name, it is possible that the home would be protected from creditors of Fuld. Second, Flordia has a law that protects the family home from creditors. Some have agrued that Fuld himself is not a Florida resident but his wife is. Thus, for her this is the family home and it could be protected from creditors under Florida law. You can find a bit more on this here (in German) and here (in English).