The Time for Asset Protection Planning is Now

Fraud & Financial Abuse

Many people come to see me for asset protection advice only after some type of actual or probable liability has arisen.  At that time, it is normally too late to do any meaningful asset protection, as most contemplated transfers of property could be undone as a fraudulent conveyance.
In order to determine whether there has been a fraudulent conveyance, which would render the planning useless, the courts look at “badges of fraud, such as the following:
1. An inadequate or fictitious consideration or a false recital as to consideration.
2. The fact that property is transferred by a debtor in anticipation of or during a pending suit.
3. Transactions which are not in the usual course or method of doing business.
4. The giving of an absolute conveyance which is intended only as security.
5. The failure to record the conveyance or an unusual delay in recording the payment.
6. Secrecy and haste are ordinarily regarded as badges of fraud but are not in themselves conclusive of fraud.
7. Insolvency or substantial indebtedness of the grantor.
8. The transfer of all the debtor’s property, especially when she is insolvent or greatly financially impoverished.
9. An excessive effort to clothe a transition with the appearance of fairness.
10. The failure of parties charged with fraudulent conveyance to produce available evidence or to testify with sufficient preciseness as to the pertinent details, at least in cases where the circumstances under which the fraud, transfer took place are suspicious.
11. The unexplained retention of possession of property transferred by the grantor after conveyance.
12. The buyer’s employment of the seller to manage the business as before, selling the goods which were the subject of the transfer.
13. The failure to examine or to take an inventory of the goods bought or the presence of looseness or incorrectness in determining the value of property.
14. The reservations of a trust for the benefit of the grantor and the property conveyed.
15. The existence of a blood or other close relationship between the parties to the transfer.
Also, certain other circumstances may constitute evidence of fraud, such as the transferee’s failure to keep a record of the dates and amounts of loans, or advances made by him to the transferor; failure to demand repayment; an erroneous or insufficient description of the property transferred; sending the money received from the transferee out of the country; assignment of the property to the seller rather than to the purchaser; and the fact that the purchaser, soon after transfer, offered to resell the property at a much higher price.
Thus, should you have assets you wish to protect, namely real estate, cash and securities, the time to plan is now.  The potential for liability already exists, whether it’s an automobile accident, failed business deal, defaulted loan, injured tenant, professional malpractice, etc.
Asset protection planning, when properly done, is perfectly legal, and in many cases, is not particularly expensive.  However, make sure that you work with an experienced and knowledgeable asset protection attorney – there’s too much at stake to do otherwise.
Address: 1414 Raleigh Rd Ste 203, Chapel Hill NC 27517
Phone: 919.636.0950 | Toll Free: 800.201.0413 | Fax: 919.493.6355 |