Joel's business, which makes customized widgets, was clearly in financial trouble in May.The situation grew worse during the summer months.In September, Joel transferred the title to his yacht to his wife for $250 000.The property's market value was $500 000.A short time later, Joel filed for bankruptcy.The transfer of the yacht can be challenged by Joel's creditors

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The transfer of the yacht can be challenged as a void preference if Joel was indebted to his wife, if the transfer occurred within three months of his bankruptcy, and if he intended to ensure that the property went to his wife rather than his other creditors. A transfer made for less than fair market value within three months of bankruptcy can be set aside as a void preference, and the intent of the debtor is an important consideration. If Joel was insolvent at the time of the transfer, it would also likely be considered a fraudulent conveyance. The ability to challenge the transfer would be under federal bankruptcy legislation.

Joel's Business, Which Makes Customized Widgets, Was Clearly in Financial