Defying common belief, no law compels a lawsuit defendant to retain assets for creditors. Supreme Court Justice Antonin Scalia emphasized that creditors have no recognizable interest in a debtor’s assets before obtaining a judgment. Asset transfers are permissible until a sheriff arrives with a Writ of Execution per a court order.
Contrary to misconceptions, a fraudulent transfer isn’t inherently criminal; it’s often a civil remedy in most states. This distinction separates irreversible transfers from those reversible by courts. In a fraudulent transfer, neither the transferor nor transferee commits a crime. Defense attorneys frequently argue successfully against fraudulent transfer claims, and even if the defendant loses, the court’s remedy is typically limited to unwinding the transfer.
The core of fraudulent transfer law, as articulated in a Florida Supreme Court case, deems it a creditor remedy. It involves actions against a transferee regarding a specific transaction, which, if declared fraudulent, is set aside. This enables the creditor to pursue the asset or seek restitution from the transferee. Importantly, it doesn’t entail action against a debtor for non-payment from a prior judgment, precluding an additional judgment against the same debtor for the fraudulent conveyance.
Defensive measures are viable even after being sued, albeit with fewer options compared to proactive planning. Quoting the Supreme Court, a sued debtor need not be paralyzed like a deer in headlights; there’s still an opportunity to protect wealth from harm.
Optimal protection lies in proactive asset safeguarding before issues arise, providing more planning flexibility and reducing challenge risks. Despite litigation, advising clients that it’s too late for asset protection is akin to a doctor claiming it’s futile to save a patient already afflicted. While options may be fewer and planning more intricate post-claim, viable strategies exist.
The Presser Law Firm, P.A. offers integrated Asset Protection Plans with existing Entities and Estate Plans or aids in crafting new ones. Contact us for a complimentary preliminary consultation on your Asset Protection options.