How can a solvent transferor avoid having his gift-type transfers being labeled as fraudulent transfers?

First, it will be assumed from the facts and circumstances surrounding the transfer (and solvency is one of the facts and circumstances), it that the transferor had an important non-asset protection motive for his transfer, such as estate planning. Asset protection planning has to be undertaken in estate or business planning context, because the transferor's solvency at the time of (and following) the transfer will substantially mitigate the fraudulent transfer issue.

The other facts should also indicate that, other than asset protection, the transferor had a valid reason for the transfer. For example, family limited partnerships and trusts have long been used in estate planning for a number of purposes; it just so happens, however, that substantial asset protection is also afforded by their proper use.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.