For North Carolina residents looking to set up an estate plan, reducing taxes and avoiding probate tend to be the most common goals. However, estate planning professionals understand that less predictable risks exist and can wreak havoc on trust funding and other tax reduction vehicles. Fraudulent Conveyance Laws can be used by courts to allow creditors access to an estate’s funds. There are a few ways to protect against attach attachment.
Anyone who has faced a civil lawsuit has at least daydreamed of placing assets into another person’s name for safekeeping. This is a great way to run afoul of explicit fraud, which would allow the court to seize those assets should a plaintiff be awarded damages. This is even true if the damages were awarded after death, unless the appropriate trust planning tools were used.
Most people understand explicit fraud, but the threat of constructive fraud is just as real. This occurs when someone transfers their assets without equivalent consideration. Certain estate planning & trust planning strategies can protect property from creditors, but others may result in needless endangerment. Courts may have differing interpretations of constructive fraud, dependent in part on the individual’s finances. Independent counsel may be invaluable in ensuring any asset transfers are unlikely to be voided by a judge.
Strategies and legal tools can be used to prevent attachment of assets in some well-defined ways. Private annuities offer one avenue as do LLC business interests. One common manner is use of a protective trust, which is funded by the estate at the time of death. These trust vehicles are constructed as part of the estate plan and come with many options that make them less vulnerable to asset attachment. North Carolina residents seeking the savings and protection of estate planning tools may benefit from the assistance of an experienced attorney.