Article courtesy of Jeff Dutson of King & Spalding
Love and affection, while nice, do not constitute reasonably equivalent value for transfer of properties worth more than $1 million under Georgia’s Uniform Fraudulent Transfers Act.
Tuggle v. Ameris Bank, 363 Ga. App. 600 (Ct. App. Ga. 2022)
A borrower transferred two parcels of property to his wife constituting borrower’s only valuable assets in exchange for “love and affection” and as well as “predicated, in part, on cognitive impairments experienced by the transferor.” At the time of the transfers, however, the appellee-bank’s predecessor had foreclosed on two properties securing the bank’s loan and obtained a deficiency judgment in excess of $150,000.
In appealing summary judgment in favor of the bank on constructive fraudulent transfer claims under Georgia’s UFTA, the transferor-spouse argued that transfers of properties worth more than $1 million “for love and affection” constituted “valuable consideration.” Tuggle v. Ameris Bank, 363 Ga.App. 600, 603 (Ga. Ct. App. 2022). The court, however, affirmed the trial court’s holding that love and affection did not constitute reasonably equivalent value from the creditor’s perspective and dismissed the argument that transferor’s cognitive impairment has any bearing on a value determination.
The court relied on decisions from other jurisdictions as no Georgia appellate decisions had addressed the issue and reasoned that adequacy of a transfer “should be determined from the standpoint of the creditor, not the debtor.” Id. at 605; see, e.g., Warfield v. Byron, 436 F.3d 551, 557-560 (5th Cir. 2006) (primary consideration is the “degree to which the transferor’s net worth is preserved”).
