Avoiding Fraudulent Conveyance

Given the threat from litigants, creditors and plaintiffs' attorneys, asset protection is crucial for protecting one's hard earned assets. Asset protection enables an individual to create a shield around his or her assets and safeguard the assets against external threats.

One thing to keep in mind, however, is that when assets are transferred after the threat has commenced, such as during a divorce or after a litigation has begun, this is often too late. Action taken to evade pre-existing creditors may be seen as a fraudulent conveyance and will likely fail. A fraudulent conveyance occurs when a person attempts to transfer assets after a cause of action has arisen, or after a creditor or litigant has begun an action. Evading one's debts is not the purpose of asset protection. The purpose of asset protection is to preserve assets before they are threatened. In order for asset protection to succeed, it must occur before the threat arises.

Back to Articles