![]() That is, if you moved the asset prior to a certain time, the transfer is safe from creditors. This is especially the case if the transfer left you insolvent to satisfy your obligation.įraudulent transfer can become indisputable when statutes of limitations expire. Courts will scrutinized a sale when transferred for less than fair value. To whom did you give your assets? Was the transfer private? Did the transferee have any information that would make the courts believe that the transfer was fraudulent? If you are faced with a legal storm where your assets are jeopardized, you may have to defend challenges to your property or assets. They do this through circumstances that imply fraudulent intent. ![]() When there is no clear case of actual fraud, a creditor will look to prove fraud. However, you must be able to satisfy your obligations as a debtor with your remaining wealth. You become insolvent when your assets are not sufficient to satisfy existing debt. In that case, there isn’t a fraudulent transfer of assets. The second point is this: at what point do you become insolvent? Let’s say you transfer property and you still have the ability to satisfy a creditor. ![]() Courts scrutinize exchanges of services for property and only services rendered at the time of the exchange or previously suffice. When the property is purchased for fair value and the transferee had no knowledge of fraudulent intent, he or she may be in the clear. The transferee can be forced to pay the difference between the price they paid and the property’s full value.The transferee can return the property in exchange for their purchase price.If assets are transferred at less than fair market value, there are a couple of outcomes: But what you can reasonably expect to gain from selling your property? Case law suggests that around 70% of the property’s value is reasonable. What represents fair market value or fair consideration? andĪddressing the first question, fair market value and consideration for your property is this: what you can reasonably sell your property for? Not necessarily the exact price your property is worth.In order to establish this there are a couple of questions to answer: Legal Questionsįraudulent transfer laws are based on the principle that your property constructively belongs to a creditor if you are unable to satisfy your obligations as a debtor. This supports the biggest point in asset protection in order to avoid fraudulent conveyance: act well before you are under legal duress. But whether or not they can reach them is another matter. There are various paths a creditor can take to your assets. They may do this by proving that your transfer was fraudulent. Creditors have their own process to convince courts that your assets should be within their reach. It must be all three of these to be a fraudulent conveyance of your property. The transfer left you unable to satisfy a creditor. ![]() Received less than fair market value for the property, and.This is done by proving that you have done the following: The most common scenario is where a creditor can reach your assets is through proving fraudulent transfer or conversion. However, those without proper plans, put assets at risk. California has some unique laws that go beyond the mere civil, however we never seen anyone prosecuted under these statutes.Īn asset protection plan helps prevent creditors from seizing your assets. This includes moving your assets into an asset protection vehicle in the heat of legal battle. ![]() In almost all cases it is merely a civil matter and you cannot go to jail for it. However, even if you are aware that your assets are at risk and you move that asset out of reach, you have NOT committed a crime. When you convey an asset in order to defraud or delay a legitimate creditor, you are engaging in fraudulent conveyance. By doing it in a timely fashion one need not be concerned about fraudulent transfer claims. But it is best to protect yourself before you need it. There are ways to protect assets after a lawsuit. It is also a common action brought by judgment creditors, as well as trustees in bankruptcy cases.įraudulent conveyance can be averted by enacting an asset protection plan in anticipation of an unforeseen lawsuit. Judges often employ these statutes to restore assets that a debtor transferred in order to avoid payments to one or more creditors. Moreover, it is commonly addressed in creditor/debtor law. The law generally defines it as a civil matter, not a criminal one. Fraudulent conveyance or fraudulent transfer is attempting to avoid a debt by moving assets to another person or legal entity. ![]()
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