Many people look to asset protection as a means of deterring creditors. However, if a creditor or litigant has already begun a lawsuit, or even if the formality of the lawsuit has not been started but the cause of action has accrued, then transferring assets to avoid the creditor or litigant may be deemed a fraudulent conveyance.
A fraudulent conveyance occurs when an individual transfers assets in an effort to prevent an existing or an identifiable probable future creditor from gaining access to the assets. This differs from the transfer of assets at a time when there are no current or probable creditors, which is fully legal.
Effective asset protection requires foresight — the foresight to recognize that a threat to your assets is inevitable, and those assets should be protected before the threat arises. Once the treat arises, the possibility of fraudulent conveyance may render asset protection ineffective. A knowledgeable attorney can assess your individual situation and formulate a plan that offers you asset protection that is secure, lasting and dependable.