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Mr. Goldstein planned to take a significant loan for a high-risk investment opportunity. “If the investment fails,” he said to his wife, “what can we do to protect our home?”

“We can grant it as a gift to our son, Shlomo, or ‘sell’ it for a nominal amount,” suggested his wife. “In this way, it won’t be under our name anymore and won’t be subjugated to the loan.”


“I’m not comfortable with granting Shlomo title of the house,” said Mr. Goldstein. “I have full confidence in him, but you can’t always foresee potential problems. There are also tax considerations.”

“Perhaps we can make an informal sale document with Shlomo without actually changing title,” suggested his wife. “If things work out, destroy the document. If the investment fails, Moshe can show his document. Alternatively, perhaps we can draft a debt document to Moshe for a large sum. This way, if the loan fails, he’ll ‘collect’ the house first, instead of the bank.”

“I’m not sure if this will work,” said Mr. Goldstein. “I don’t want to get into legal trouble.”

“Of course, you must first speak with a lawyer!” stated his wife emphatically.

Mr. Goldstein discussed the various legal aspects with his lawyer. The lawyer explained that there is a problem of “fraudulent conveyance” in granting assets to evade paying creditors, which is governed in almost all states by the Uniform Fraudulent Transfer Act. Their idea violated a number of “badges of fraud.” He advised Mr. Goldstein on what could be done within the framework of law.

“I’d like to also discuss the issue with Rabbi Dayan,” Mr. Goldstein said. “I wonder what halacha has to say.”

When he raised the matter with Rabbi Dayan, the latter said, “The Gemara [Kesubos 78b] discusses a widow who granted all her assets to her daughter before remarrying to keep them from her second husband. She subsequently got divorced and demanded the property back from her daughter. Rav Nachman voided the gift as fictitious since a person presumably will not abandon his financial interests to give another.”

“The Rosh [Kesubos 8:3; Responsa 78:1-3] derives from this discussion that one cannot grant assets to evade creditors,” continued Rabbi Dayan. “Unless the borrower left enough for his sustenance, the clear umdena (evaluation) is that the gift is fictitious. The Sages voided his gift to thwart his cunning plans.”

“The Rosh cites a similar ruling of the Maharam of Rothenberg,” added Rabbi Dayan. “Someone purchased a property and listed it under his brother’s name to prevent his wife from collecting her kesubah from it. The Maharam ruled that she can collect it regardless. R’ Tam [Tosafos, Kesubos 79a s.v. “asa’um”), however, upheld a gift of assets before taking a loan to avoid their becoming subjugated.”

“What does Shulchan Aruch say?” asked Mr. Goldstein.

Shulchan Aruch [Choshen Mishpat 99:6-8] cites the Rosh and Maharam,” answered Rabbi Dayan. “If a borrower dispossesses his assets to evade his creditors, his cunning plans are void, and they can collect the assets. The Rema concludes, however, that if the gift does not appear devious to beis din – it actually seems like a genuine gift – the transaction is valid even though he intended to protect the asset from creditors.”

“What does that mean?” asked Mr. Goldstein.

“The Ketzos [99:8] and Nesivos [99:6] explain that if the legal transfer is absolute, so that the asset leaves the possession of the giver and he cannot retract, the gift is valid even if the motive was to protect the asset and he would not have given it otherwise,” explained Rabbi Dayan. “Chavos Yair [#200] writes, however, that if he was deceitful and intended to evade paying the creditor, we void the gift, even if transfer was absolute. The Tumim disagrees.” [Pischei Teshuva 99:7; Pischei Choshen, Nezikin 15:56]

“I should mention,” concluded Rabbi Dayan, “that many of these principles are also found in the UFTA.”


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Rabbi Meir Orlian is a faculty member of the Business Halacha Institute, headed by HaRav Chaim Kohn, a noted dayan. To receive BHI’s free newsletter, Business Weekly, send an e-mail to For questions regarding business halacha issues, or to bring a BHI lecturer to your business or shul, call the confidential hotline at 877-845-8455 or e-mail