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Avoid Fraudulent Conveyances
   by Ray Como   

 The Rothchid Supercapitalist Clan was rumored to be one of the first private families ever to accumulate a billion dollars. That was way back in the 1700's. If the Rothchild's had been able to consistently maintain just a 4% a year return on their money, by today, they would have accumulated 90 trillion 510 billion 107 million dollars! That's $90,510,107,000,000. I think that's more wealth than exists on the face of the earth.

What happened? They started and financed wars which they won and lost. They made bad investments. They had smart kids, stupid kids, scared kids, cocky kids and fearless kids. Their kids got kidnapped, married and divorced. They owned companies that went bankrupt. They hired incompetent advisors. They fired some of the best advisors. Economies changed. People died. People lived! They were targets. They got robbed. And they got sued round the globe.

Let me tell you, holding onto wealth is an on-going job. In fact, keeping it just may be harder than getting it. For years I have been preaching and writing about asset protection strategies. I believe that an asset protection plan is as important as a tax plan, an investment plan, a corporate plan, even a business plan.

There are many asset protection techniques available to you. Keep a low profile. systematically drain you checking accounts. Lien free and clear titles to cars, boats and planes. Lien chattel, equipment and computers. Keep personal property private. Encumber all real estate. Hold title to real estate in your Nevada Corporation. Asset protection techniques are best implemented upon acquisition of any asset. You are smart if you implement your asset protection in conjunction with your asset acquisition.

Further, be sure all these transactions are for an arms-length, acceptable business purpose. In essence...Avoid Fraudulent Conveyances.

The determination of whether a transfer is fraudulent or lawful is a question of fact which courts decide in each case after considering a number of factors.

First, transfers are tested under the state statute that protects creditors. The Uniform Fraudulent Conveyance act has been adopted in Arizona, California, Delaware, Idaho, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hamphshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Utah, Virgin Islands, Washington, Wisconsin and Wyoming. The states of Hawaii and Oregon follow the Uniform Fraudulent transfers Act. The other states follow common law court decisions and, for practical purposes follow the UFCA.

There is no Federal Law that governs fraudulent transfers. Therefore all creditors (even the IRS and other federal agencies) must adopt the law in the state where the debtor lives. In order for a transfer to be challenged as "fraudulent" there has to be actual prejudice to the rights of the complaining creditor.

There are two types of fraudulent conveyances:

  1. Fraud-in-Law: This is where the nature of the transaction creates a presumption that the conveyance is fraudulent.
  2. Fraud-in-Fact: There is actual fraudulent intent to hinder and delay creditors.

Fraud-in-law occurs when the following factors are present: (1) you sell or gift assets for less than fair market value, (2) there exists or you anticipate liability and (3) you fail to retain enough assets to satisfy the liability.

Take Notice: You don't have to deliberately try to hinder the creditor. In fact, the creditor is not even obligated to prove you "intended" it. All s/he must do is prove 1, 2 or 3 above.

Fraud-in-Fact occurs when the following elements are examined by the creditors and considered by the courts to infer a fraudulent conveyance.

(1) Failure to record a conveyance, (2) failure to cooperate with the courts during an investigation, (3) failure of the buyer to take prudent steps prior to acquiring the asset, (4) An inadequate or false recital of consideration, (5) Transferring a property during or in the face of a pending lawsuit, (6) when the debtor retains a beneficial interest in the asset, or a retains a future right to re-acquire the asset, (7) when the debtor transfers all his or her assets the thereby making the debtor insolvent, (8) when the debtor retains possession of the property even after the conveyance, (9) transfers are not "arms-length" or for an acceptable business purpose, (10) the debtor and the transferee are close friends or relatives, (11) when there are poor records concerning the transaction, (12) when dates are changed and/or documents are obviously altered, (13) when debtors transfers money out of the country, (14) when assets are quickly re-sold for substantially more than the original conveyance and (15) when demands are not made on demand notes and other payments due.

Here is my advice: Make your transfers for an arms-length purpose. Keep good records. Create a legitimate paper trail. And please, start protecting your assets the day you acquire them.

© MMI By Ray Como. All Rights Reserved

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Ray Como has created, produced, copyrighted and self-published 15 audio cassette programs and lots of other forms and tools for business, real estate, corporations, selling, marketing, finance, management and Entrepreneurship.
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