|
|
|
|
Why do I have to be careful about ‘fraudulent transfer rules?’
There are many federal and state statutory prohibitions regarding fraudulent transfers. A fraudulent transfer occurs whenever you transfer your property in an effort to stop a legitimate creditor from taking the asset, in order to satisfy a legitimate debt. If you transfer your property away while you know of the existence of a creditor, or have reason to know that a potential creditor exists, such a transfer may be considered fraudulent. The transfer could be undone, and you could be charged with a crime and face fines, restitution orders, probation, or imprisonment.
So, whatever asset protection techniques you choose to use, you must be careful not to trigger prohibitions against fraudulent transfers. Many attorneys are reluctant to assist people in certain asset protection schemes because of the fraudulent transfer rules. An attorney who participates in a fraudulent transfer scheme can be regarded as a co-conspirator in the fraud, and can be subject to the same penalties as his/her client.
You, your attorney, and others who help you set up your asset protection plan can be protected if you create a statement of solvency before you transfer funds or property. If you are solvent at that point, meaning that you have assets and income to pay all your known creditors, then your transfer isn’t fraudulent. This is true even if a creditor should appear after the transfer has been made. For example, if you demonstrate your solvency, transfer property, and then someone sues you and gets a large judgment against you, the plaintiff in the lawsuit can’t claim that your transfer was fraudulent if you didn’t know the lawsuit was pending at the time you made the transfer. Be absolutely sure that a statement of solvency is accurate, because the penalties for a fraudulent transfer can be severe.
If you have assets you want to protect, it is much better to make transfers before any problems with potential creditors arise. If you wait until you know there might be a problem, your creditor can claim that any transfers made at that point are fraudulent. |
|
|
|
|
|
|
|
|
|
|
FREE CASE REVIEW |
|
|
 |
|
|
|
|
|
|
|
|
|
|
|
|
State Law Center
|
Legal Resource Directory
|
Legal Articles
|
Insurance Advice and Quotes
|
FreeAdvice Answers
|
Community Forums
