Can a Life Estate in a Home Be Attached by a Judgment Creditor?

Full question:

I have a judgement against me of 25,000 due to selling a business and having the new owner run it into the ground and breaking the lease 3 months early.She took over my lease but they can still come after me.My name and my sisters name is on my moms condo since 1995,creating a life estate which is listed as such on the quick claim form. Do i have anything to be concerned about?If so and i do a quick claim with my sister what about the life estate issue?

• Category: Debts and Credit
• Date: 04/07/2025
• State: Minnesota

Answer:

If the judgment is against you as an individual and you own a life estate, it is possible that the life estate interest could be attached. If a transfer is created with knowledge of an impending claim, it is possible the transfer could be challenged as a fraudulent conveyance. For example, creating a trust right before filing bankruptcy may throw up red flags for examination.

The elements of a fraudulent conveyance transfer are defined as follows by the Uniform Fraudulent Transfer Act:

(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
(1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or
(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
(ii) intended to incur, or believed or reasonably should have believed that he [or she] would incur, debts beyond his [or her] ability to pay as they became due.