Asset Protection And Fraudulent Transfer
Below is a MRR and PLR article in category Reference Education -> subcategory Legal.
Asset Protection and Fraudulent Transfer
Overview
Thousands of individuals and businesses offer asset protection services through emails and websites, promising to shield your assets from creditors, ex-spouses, and tax authorities. However, many of these services involve practices that could violate the Uniform Fraudulent Transfer Act, potentially leading to significant financial and legal consequences.
Understanding Fraudulent Transfers
As outlined by [Plan My Estate](http://www.plan-my-estate.com), a fraudulent transfer, also known as a fraudulent conveyance, occurs when a debtor transfers assets to evade creditor claims. For instance, if a debtor "sells" assets to a trusted person for a nominal amount to hide them from creditors, such transactions can be overturned by the court, forcing the assets to be returned to the creditor. Essentially, any action that undermines the rights of unsecured creditors may be disregarded by the courts.
Risks of Asset Protection Schemes
Many online asset protection services suggest transferring assets to someone trustworthy or to a newly formed business entity. If the court deems such transfers as attempts to evade creditors under the Uniform Fraudulent Transfer Act, several consequences could ensue:
- Judgments against both the original owner and the recipient
- Property seizure or liens
- Legal fees and court costs
These schemes often carry the risk of leaving you without recourse if the transferee mismanages or disposes of the assets.
Misconceptions About Trusts
Some services propose setting up revocable living trusts as a protective measure, claiming assets will be safe from creditors. However, since you retain control over the trust, creditors can still access those assets. While a revocable living trust might not constitute a fraudulent transfer, it doesn’t offer true legal protection from creditors.
Seeking Professional Advice
Not all asset protection companies are problematic?"some are knowledgeable and reliable. Nonetheless, consulting directly with a specialist attorney is advisable. An attorney with expertise in asset protection, estate planning, or bankruptcy law can accurately assess whether protecting your assets is feasible and worthwhile. Many attorneys offer free or low-cost initial consultations.
Final Thoughts
Always consult a legal professional before engaging in asset protection strategies. This article reflects personal insights and experiences, not legal advice. Legal matters require guidance from qualified attorneys to navigate complex regulations and avoid potential pitfalls.
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Disclaimer: The information provided here is based on personal experience and should not be considered legal advice. Always consult with a qualified attorney for assistance in legal matters.
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