There are a lot of ways to go about protecting your assets. But not all of them are created equally. You need a plan that suits your needs and protects your wealth in an effective way. However, if you’re not careful in how you go about doing that, then you could face unintended consequences and even end up running afoul of the law.
What is a fraudulent conveyance?
A fraudulent conveyance is the transfer of property with the sole intent of keeping it away from creditors. In the asset protect context, creditors may challenge gifts that you give to your loved ones if they think that you did so to avoid paying the debts that you owe.
How is a fraudulent conveyance spotted?
There are some telltale signs of a fraudulent conveyance. Any of the following could lead creditors to question your actions and potentially take legal action against you:
- You retain possession or control of the property even after transferring it to someone else
- You transferred the property after being threatened with a lawsuit or some sort of debt collection
- You became insolvent after transferring the property
- You took on a large debt shortly after transferring the property
- You’ve been found to conceal assets
How can you avoid being accused of a fraudulent conveyance?
To avoid issues with creditors, you need to make sure that your intentions are clear and that they’re more about caring for your loved ones rather than avoiding a creditor. Perhaps the best way to do this is to transfer your property well before you actually need to. By waiting too long, you could give the impression that you’re merely trying to place the asset outside the reach of a creditor, which can lead to legal action.
We know that these issues can be enormously complex. But that’s why experienced law firms like ours stand ready to assist you in protecting your assets in a legally valid and effective fashion.