What Is A Fraudulent Transfer?

by Bruce Givner on October 13, 2011

When you engage in asset protection planning, you should do so before you have a problem. If you wait until you have a problem and then you take steps to create an asset protection plan, you are at risk of engaging in a fraudulent transfer. There are two types of fraudulent transfers. The first type of fraudulent transfer is an intentional fraudulent transfer, which is a transfer made with the actual intent to hinder, delay or defraud any creditor. Since it is difficult to read your mind, California law provides a list of eleven so-called “BADGES” of fraud, and the presence of several of them may be enough to convince the court of your bad intent. For example, if you made a transfer to a family member, that is more likely to be treated as an intentional fraudulent transfer. And estate planning, which involves gifts to family members, is particularly susceptible to being viewed as an intentional fraudulent transfer, other common strategies in asset protection can also be viewed as an intentional fraudulent transfer.

The other type of fraudulent transfer is a constructive fraudulent transfer. This is a transfer when you do not receive “reasonably equivalent value” in exchange and you leave yourself with inadequate assets to pay your bills as they become due.

In a future blog we will discuss the bad results that can occur if you engage in a fraudulent transfer.

{ 5 comments… read them below or add one }

admin October 18, 2011 at 1:41 pm

Our pleasure. Have you reviewed your asset protection plan recently?

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Mattie October 28, 2011 at 1:18 am

I’m impressed by your writing.

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admin October 28, 2011 at 10:41 am

Thank you. Did you have any questions?

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Chadwick Procsal October 27, 2011 at 4:49 am

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Maggie October 27, 2011 at 1:33 pm

I’m shocked that I found this info so easily.

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