Shannon Pawley, The Estate & Asset Protection Law Firm Owner, presents a scenario that, when attempted fails: Creating a trust to intentionally defraud creditors.

DECATUR, GA, November ••, 2023: Shannon Pawley, Owner of The Estate & Asset Protection Law Firm, has posted a new blog on the law firm’s website entitled “What Happens If Assets Are Transferred into a Trust to Avoid Creditors.” Ms. Pawley engages the imagination with a scenario that should never be attempted.

Pawley invites readers to, “Imagine this scenario: You have somehow gotten into serious financial trouble. Creditors are calling on a regular basis and you decide that you’ll get them off your back by filing for bankruptcy. She goes on to add, “But before you do, you decide to go to an attorney to create an asset protection plan by setting up an irrevocable trust.” In this scenario, Pawley writes, “You “accidentally” fail to tell the attorney that you are going to file for bankruptcy. You put your assets into the trust, naming a family member as the beneficiary of the trust. Then, after avoiding creditors for several more months, you file for bankruptcy.”

According to Pawley, “Most people don’t do what I’ve just described above. But some people do attempt it. What those who try this route find out is that the court can render an irrevocable trust invalid if intent to defraud can be proved.” She continues, “Those who attempt this tactic think that proving fraud may be difficult, but it really isn’t. Creditors are not so easily fooled.”

Pawley goes on the explain, “If you transfer your assets into a trust prior to filing for bankruptcy, a bankruptcy trustee appointed to your case will first look to see what type of trust you have and next look to see if the transfer you made was a fraudulent transfer.” As Pawley notes, “If you have a revocable trust, then in essence, you still have control over an asset and can simply place the asset back into your personal name and therefore a trustee can step into your shoes and accomplish the same task.  Therefore, a revocable trust will be of no value to you to protect your asset in a bankruptcy context.”

“If you have an irrevocable trust that you created prior to filing for bankruptcy,” Pawley explains, “a bankruptcy trustee will look to see if the transfer you made was fraudulent based on state law and the bankruptcy code to avoid paying creditors.  In general, if you gave away your assets and received no value in return, this may be legally considered a fraudulent transfer.”

Pawley emphasizes, “Under Georgia’s Uniform Voidable Transactions Act (the Act), a property transfer that a debtor makes with the intent to defraud, delay, or hinder a creditor may be deemed a fraudulent conveyance. The property transferred may be any of a debtor’s assets and include anything that is subject to ownership. The repercussions for actual and constructive fraud are the same. The transferee can be sued by a creditor or bankruptcy trustee. If fraud is proven, the court can render the transfer void and order a return of the transferred money or property. The court can also enter a money judgment against the transferee equal to the value of the asset transferred.”

The entire blog can be by CLICKING HERE

About The Estate & Asset Protection Law Firm

The Estate & Asset Protection Law Firm was established to serve the legal needs of retiring citizens. The Firm focuses its entire practice on providing strategies to protect independence, privacy, assets and taxes from the government. Shannon Pawley has grown her law practice by providing excellent customer satisfaction with personalized wealth protection plans.

About Shannon M. Pawley, J.D., LL.M

As the owner of The Estate & Asset Protection Law Firm, Shannon M. Pawley and her entire team share a passion which focuses on being able to serve the legal needs of retiring individuals. In our firm, WE BELIEVE that people should not have to lose everything they’ve worked a lifetime to earn and that every person is an individual who deserves respect and the highest quality of life possible, regardless of age or ability. We also believe that privacy and protection are the keys to personal peace. Born and raised in the Tidewater area of Virginia to a tightknit family with strong military service roots, Shannon learned from an early age the value of hard work and the importance of social awareness to ensure you always leave a situation in a better place than how you entered it. In her junior year of high school, Shannon served as U.S. House of Representatives Page during the 101st United States Congressional Session in Washington, D.C. This experience exposed her to numerous new cultures and worldly issues. Walking away from her experience as a U.S. House of Representative Page, Shannon knew that she wanted to pursue legal studies and be able to assist others in obtaining the best results available in difficult situations.

Shannon earned her undergraduate degree at North Carolina Wesleyan College and pursued a law degree from Michigan State University College of Law. After obtaining her law degree and becoming a licensed attorney in Michigan, she continued her educational pursuit by acquiring a LL.M. (Master of Law) in Taxation from Wayne State University. After moving to Georgia in 2018, Shannon obtained her Georgia law license and has enjoyed being able to pursue her desire of ensuring persons are able to age with dignity, grace and independence.