Fraudulent Transfers

Fraudulent Conveyance and Proper Asset Transfer

Fraudulent Conveyance or fraudulent transfer is the movement of your assets when they are at risk to a creditor or legal opponent. This is the tell tale sign of the person who didn't have an asset protection plan in place and then tried to move their assets after legal opponent had commenced legal action.

Fraudulent conveyance is a very important concept when it comes to protecting your assets from creditor attack. To commit a fraudulent conveyance means that you intended to defraud or delay creditors. It also means that you lacked the financial means to pay off a debt or deliberately made your property inaccessible to confuse or delay creditors or placed your property in a location beyond your creditor's reach. It can’t be suggested strongly enough that you check with your attorney about the Bankruptcy Code, the Uniform Fraudulent Conveyances Act (UFCA) and the Uniform Fraudulent Transfers Act (UFTA). The law is very specific, so it's essential that you speak with an experienced attorney before you transfer assets; for the proper protection and advice or if you are being sued because you have been accused of a fraudulent conveyance of assets. Our attorneys are not only trained in handling simple business dispute matters, we take care of complex fraudulent conveyance litigation in the event of litigation with a guardianship proceeding in Nassau County, Suffolk County, Queens County, Bronx, Westchester, Richmond County, Manhattan and Brooklyn Kings County New York.

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The more the questions below that are answered yes, then the more the likelihood that you’ll be found to have fraudulently conveyed (or transferred) the property. A symbol of fraudulent conveyance is simply an indicator of what may have happened. A U.S. court might find that someone had the intent to defraud a creditor by confirming several of the following badges of fraud:

  • Did the debtor know, or inform anyone, that he was going to be sued?
  • Were the debtor’s financial difficulties or legal problems readily or easily foreseeable?
  • Was the asset transferred to the trust or corporation?
  • Does the plaintiff have an interest in the property?
  • Does the asset transfer or the debtor fall within the statute of limitations of the Bankruptcy code, Uniform Fraudulent Conveyances Act (UFCA) or the Uniform Fraudulent Transfers Act (UFTA)?
  • Was the intention of the debtor to delay, hinder or defraud a creditor?
  • Did the debtor lack sufficient financial means to meet his debts after the asset transfer?
  • How secret was the transaction?
  • How does the debtor's financial situation change before and after the transfer of assets to the trust or corporation?
  • What does the timing or sequence of financial events indicate or imply?
  • What is the cumulative effect of these transfers?
  • Are close friends or family members parties in the transactions?
  • After the property was conveyed, did the debtor remain in control or retain possession of it?
  • Did the debtor run off after he conveyed the property?
  • Did the asset transfer make up most or all of the assets?
  • Did the debtor become insolvent after he conveyed the property?
  • Did the debtor intentionally incur debt that he could not pay?

The major threat to any asset protection plan is procrastination. By sitting back and waiting, the debtor loses precious time.

And time is one advantage protecting the debtor from a fraudulent conveyance claim. As time passes, transferring assets into a trust or corporation becomes secure. To put it simply, creditors cannot assert that you transferred the assets into the trust, or corporation, to commit fraud. Furthermore, creditors cannot claim that the assets are in the trust or corporation to prevent them from having access to the assets. In short, time works to your advantage when the asset protection plan was implemented well in advance of financial or legal difficulties because it demonstrates a lack of intent to frustrate creditors or commit fraud.

In order to prevent a fraudulent conveyance claim, you have to do the following:

  • Establish your asset protection plan as soon as you possibly can.
  • Implement the plan when the legal and financial seas are calm (i.e., before you are sued or in trouble with any creditor.)
  • Hold on to enough assets outside the asset protection plan to meet you financial obligations as well as maintaining your solvency.
  • Finally, when in trouble, think about the corporation as your fallback position.

Anytime you convey an asset in order to defraud or delay a legitimate individual, you are committing fraudulent conveyance. If you are aware that your assets are at risk and could be used to satisfy a legal obligation and you move that asset out of reach, you committed a crime.

This includes moving your assets into an asset protection vehicle in the heat of legal battle. Asset protection must be conducted when you are not at risk. This means that you are conveying your assets at the time you asset protection plan is created, not when you are in a legal situation, therefore it is no longer fraudulent.

Proving Fraudulent Transfer

An asset protection plan helps prevent creditors from seizing your assets. The most common scenario where a creditor can reach your assets is through proving fraudulent transfer. This is done by proving that you have done the following:

  • Transferred your property
  • Received less than fair market value for the property, and
  • The transfer left you unable to satisfy a creditor

It must be all three of these to be fraudulent transfer of your property. Creditors have their own process to convince a court that your assets should be within their reach by proving that your transfer was fraudulent. There are various paths a creditor can take to your assets in these types of cases which supports the biggest point in asset protection; act now when there is no legal duress.

Fraudulent 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. In order to establish this there are a couple of questions that must be answered;

  1. What represents fair market value or fair consideration?
  2. At what point do you become insolvent?

Addressing the first question, fair market value and consideration for your property is what you can reasonably sell your property for. Not necessarily the exact price your property is worth, 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. If assets are transferred for less than fair market value, there are a couple of outcomes in this case;

  1. The transferee can return the property in exchange for their purchase price
  2. The transferee can be forced to pay the difference between the price they paid and the property’s full value

When the property is purchased for fair value and the transferee had no knowledge of fraudulent intent, he or she is fully protected. Courts scrutinize exchanges of services for property and only services rendered at the time of the exchange or previously suffice; a guarantee of future services does not succeed.

The second point is: At what point do you become insolvent? If your property is transferred and you still have the ability to satisfy a creditor, there isn’t any fraudulent transfer of assets. You become insolvent when your assets are not sufficient to satisfy existing debt. You can gift your property, however you must be able to satisfy your obligations as a debtor with your remaining wealth.

When there is no clear case of actual fraud, a creditor will look to prove fraud through circumstances that imply fraudulent intent. To whom did you give your assets? Was the transfer private and did the transferee have any information that would make the courts believe that the transfer was fraudulent? If you are ever faced with a legal storm where your assets are jeopardized, you may have to defend challenges to your property or assets being transferred for less than fair value. This is especially the case if the transfer left you insolvent to satisfy your obligation.

Fraudulent transfer can become indisputable within statutes of limitations. The strongest asset protection is a plan that has been in place for several years before it is needed. Although laws vary in each state, most of them have a 4 year statute of limitations for fraudulent transfer, or 1 year after the discovery of a transfer. In the case of Bankruptcy, property transfers in the previous year will most likely be examined closely for intent to delay or hinder a creditor. If you commit fraudulent transfer of your property, your Bankruptcy proceedings could be unpleasant, as the court could refuse to release you of other debts, based on your conduct.

Be selective when you choose who receives your property. Your transferee can become involved very quickly if it is discovered that they were involved in fraudulent conveyance of your property. This means that they could be forced to return the property, or if they transferred it again, they could be liable to repay the amount of the property, or worse, find themselves in a criminal court case, in some states. It is rare that civil or criminal charges result from transfer of assets unless there is a clear case of deception or bad faith.

If the court finds basis for raising fraudulent transfer of your property, the outcome is essentially to restore the debtor to his or her position, prior to the transfer of property. This can get complicated if the property is no longer recoverable. The transferee and debtor can be held jointly liable for the property value as well as the creditor’s attorney fees for recovering the value of the property.

Proper Conveyance of Assets

Transfer your assets into a protective structure before you need protection. Perform this with asset protection, estate planning and/or business advancement as your goal. When your assets are protected properly, creditors have a difficult case to prove fraudulent transfer, which is their only gateway to your assets.

Establish your entire asset protection plan and create the tools and vehicles you will use. Place your assets into these containers and then the owner of the assets is the legal structure. You can set up your asset protection plan so that it can be activated when you are in a legal battle. This is the key to properly creating an asset protection strategy, you do this when you don't have to, set up all of your tools and move your assets legally and when you need to, you activate your asset protection plan and your wealth is protected.

You can activate your asset protection plan all the way into a legal battle and your assets are moved out of reach of the U.S. legal system - only if you set up your asset protection before you need it. There are some things that can be done after legal action has started, it just gets more complicated.

Keeping It Safe

Protect yourself now. There are ways to safely transfer your assets once a liability exists, but it is best to do so beforehand.

Transfer your property for reasons other than delaying or hindering a creditor.

Seek experienced help in your Asset Protection Planning.

The best way to avoid a lawsuit is if your assets are held in a skilled protection plan before the need arises, you could very well weather a legal storm that would otherwise destroy your lifetime accumulated wealth. The attorney's at The Christine Thea Rubinstein Law Firm can put together a proper plan to protect you and your families’ assets. Call The Christine Thea Rubinstein Law Firm at 1-800-200-1529.

We are dedicated to your success — so contact us. Speak with one of our knowledgeable Long Island Creditor and fraudulent conveyance litigation attorneys today from wherever you are in New York in Nassau and Suffolk, Brooklyn, Kings and Queens Counties, on Long Island and all New York City boroughs including Bronx, Westchester, Richmond County, and Manhattan. Call 1-800-200-1529 today.

Get Help With Your Plan Now be prepared before it is too late.

You should know you have certain legal rights and must be very selective of the Lawyer or Law Firm that you chose to represent you.

Have an Attorney council you on the Right Decision for You.

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About the Website of The Christine Thea Rubinstein Law Firm and the legal information on the screen above: We hope you find this information useful and informative, but it is not the same as legal counsel. A free website is ultimately worth everything it costs you; you rely on it at your own risk. This website and any other website on this legal topic does not substitute real legal advice, face to face with an attorney. Good legal advice includes a review of all of the facts of your situation, including many that may at first glance seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published online. Speak with an attorney today to help resolve any legal issues that you and your family may be facing.

The lawyers at The Christine Thea Rubinstein Law Firm are dedicated to your success — so contact us. Speak with one of our knowledgeable Long Island, asset protection, fraudulent transfer, will and estate planning, living trust estate litigation attorneys today from wherever you are in New York in Nassau and Suffolk, Brooklyn, Kings and Queens Counties, on Long Island and all New York City boroughs including Bronx, Westchester, Richmond County, and Manhattan. Call 1-800-200-1529 today.

Call 1-800-200-1529 today.

Get help with your Asset Protection plan now be properly prepared for your loved ones with the proper estate plan.  You should know you have certain legal rights and must be very selective of the estate law lawyer or elder law firm that you chose to represent you with your estate litigation.

Call 1-800-200-1529 today.

You should know you have certain legal rights and must be very selective of the lawyer or law firm that you chose to represent you. Have an attorney council you on the right decision for you and your family.

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