I had just finished giving a presentation on asset protection strategies and recent developments in insolvency law at a national convention. I was packing up my presentation notes and answering a few questions for attendees, when a well respected asset planner approached me with a pen in one hand and a notepad in the other. He had taken down copious notes about various asset protection techniques that I had discussed.
He had been particularly curious about the possibility of using a family corporation or a trust as an estate planning tool. He explained that he was very interested in the subject because he had a wealthy client who had just been sued and he was concerned that the law suit could “wipe his client out.”
He clearly had missed the start of my presentation: I smiled and asked “When did you come into this presentation?” We both knew that was not his fault – I was one of several speakers offering presentations that morning and the organizers and I had underestimated how popular my topic would be.
I then shared with him the slide that he missed. The one that reads:
“BY THE TIME YOU KNOW OF A GOOD REASON FOR
IT IS TOO LATE”
I then explained the problem to him: If a person transfers assets as part of valid estate planning or business planning, while they are solvent and without knowledge of a claim, that transfer can be protected (subject to certain limitations). But the same transfer of the same assets for the same consideration when a person is insolvent or knows about a claim against them will be avoidable as a fraudulent transfer.
Further, an attorney who assists in a fraudulent transfer may subject themself to liability for assisting in the transaction.
Which is why I always recommend asset protection planning BEFORE clients think it will help them.