Tennessee Father’s Interest in Trust Held Not Fraudulent Transfer
Tennessee child support collection case summary.
Melissa L. Taylor v. James T. George, II
The husband and wife in this Tennessee case were divorced in South Carolina in 2002. They had two children, both of whom were adults by the time of the Tennessee litigation. As a part of the South Carolina case, the husband signed a stipulation admitting that he owed $80,000 in unpaid spousal and child support.
After the divorce, the wife moved with the children to Knoxville, Tennessee. The husband moved to Knoxville a few years later. The wife registered the South Carolina judgment in Knox County, Tennessee. The husband didn’t pay any amount toward the $80,000 judgment.
The husband’s mother died in 2007, and her will set up a trust. The husband was a beneficiary, and $40,000 was allocated to each of the two children, but earmarked for the child’s college education. The will also provided that the wife must execute a release prior to the funds being paid into the college fund.
The wife then brought an action in Tennessee to determine the parties’ positions. The lawsuit named both the husband and the trustee of the trust.
The trial court first held that there was jurisdiction over the trustee. It then held that there had not been a fraudulent transfer to the husband, even though funds had been paid out to the husband, when the trustee was aware of the wife’s claim. It further held, however, that she had no claim against the funds that had gone to the children’s college funds. Both parties appealed various issues to the Tennessee Court of Appeals.
The appeals court first held that there had been no fraudulent transfer because only transfers made by a debtor come under the statute. Any conduct by the trustee was outside the scope of the statute.
The appeals court also looked at the evidence and concluded that there had been no conspiracy to defraud. Even though making the judgment difficult to collect might have been the motive, there was no evidence of any underlying wrongdoing.
The court also held that the wife had no claim against the money in the college funds, since she had expressly decided not to litigate this issue at trial.
Finally, the appeals court examined the language of the South Carolina judgment and concluded that the wife was entitled to prejudgment interest on her claim against the husband.
For these reasons, the Court of Appeals affirmed the decision of the lower court.
No. E2014-00608-COA-R3-CV (Tenn. Ct. App. Mar. 16, 2015).
See original opinion for exact language. Legal citations omitted.
To learn more, see Child Support Collection & Enforcement in Tennessee. See also Tennessee Parenting Plans and Child Support Worksheets: Building a Constructive Future for Your Family featuring actual examples of parenting plans and child support worksheets from real cases available on Amazon.com.
