Asset protection is a way of ensuring that an individual has access to their assets if they are sued or come under financial strain. It is important to understand when the best time for protecting your money and property is. In that way, you can safeguard your hard-earned assets without placing them or yourself in jeopardy.
What Is a Fraudulent Transfer?
A fraudulent transfer occurs when you transfer your assets with the intention of depriving your creditors of what they are due. It is important to ensure that any asset protection plans comply with these regulations. In that way, you can protect yourself from legal action. Generally it is best practice to act before entering into any situation where someone could accuse you of making a fraudulent transfer.
Fraudulent Transfer Look Back Period
Different states have different look back periods on fraudulent transfers. It is important to understand the law in the state where you reside and where your asset is located. The look back period refers to the length of time creditors can go back and claim a transfer was made in an effort to defraud them.
Typically, this time frame includes any transfer made within four years prior to filing for bankruptcy or when a creditor files a lawsuit against you. But there is a ten-year look back period in bankruptcy to assets that you transfer to a self-settled spendthrift trust. (A common type of self-settled spendthrift trust is called an Asset Protection Trust.) Therefore, it’s important to act sooner than later in order to properly protect your assets from potential legal action.