Fraudulent Transfer

Asset Protection Concern

Voidable Transfer of Property

What is a Fraudulent Transfer?

A fraudulent transfer occurs when property is transferred to a close relative, LLC, Inc., or Trust with the intent to hinder, delay or defraud creditors. A transfer is voidable if the property is sold for less than reasonable value.

A transfer is voidable if the property is sold for less than reasonable value. An example: Karen sells her $15,000 car to her mother for $100 to avoid creditors. This transfer could be considered voidable if it was made when Karen had reason to know she would be a defendant in a lawsuit or was served as a defendant. Also known as lis pendens (Pending Lawsuit).

There is focus on transfers made in anticipation of any money judgement, settlement, civil penalty, equitable order, or criminal fine. The law concerning fraudulent transfers are designed to prevent a debtor from concealing or disposing property to fraud a creditor. Bernie Madoff, convicted ponzi scheme, sought to defraud creditors in bankruptcy through fraudulent transfers.