Fraudulent Conveyance

Most people don’t want to lose all of their stuff if they get sued. They may be tempted to commit a fraudulent conveyance. Their first reaction might be to give their property away to someone they trust. Then they can just get it back when the dust settles. While some people may think this is an option, it is not a good one.

Arizona statutes make it clear that fraudulent conveyances of property amount to a class 2 misdemeanor. (See A.R.S. §§ 44-1211 and 1217).

What exactly is a fraudulent conveyance?

It usually involves a creditor coming after you for something you owe them. You (the debtor) don’t want to lose your property, whatever that might be. So you “sell” it or temporarily give it away.

The intent is important. If you actually had already sold the property before you learned about the creditor that may be a different story.

But if your intent is to “defraud, hinder, or delay” the creditor of their rights, this is where you can incur criminal culpability.

Off-shore Trusts

Proper risk management planning includes structuring the plan prior to learning of a lawsuit or a creditor who wants to get your assets. While it is not as common for most people, an off-shore Trust can be an effective way for high net worth individuals to minimize the risk of creditors getting to their assets.

Use of a properly structured offshore Trust to preserve assets always trumps the use of a domestic Trust used to preserve assets. An offshore Trust presents creditors with several obstacles:

1) Complex jurisdictional issues,

2) Extremely high costs to the creditor attempting to breach the Trust,

3) Payment by the creditor of all legal fees incurred by the Trust in its defense if creditor is unsuccessful.

Offshore Trusts provide greater protection for those who want to preserve their assets. However, they may provide greater protection than needed. Also, the expense typically prevents many people from taking this route. You have several options in the risk management arena. We would love to explore what may be the right fit for you.

Please contact us:

If you have questions about how to manage the risk involved in your estate, please call Durfee Law Group at 480.324.8000. We can help.