A primary goal of your estate plan is to transfer wealth to your family according to your wishes and at the lowest possible tax cost. However, if you have creditors, be aware of fraudulent transfer laws. In a nutshell, if your creditors challenge your gifts, trusts, or other strategies as fraudulent transfers, they can quickly undo your estate plan.
Two Fraud Types
Most states have adopted the Uniform Fraudulent Transfer Act (UFTA). The act allows creditors to challenge transfers involving two types of fraud that you should be mindful of as you weigh your estate planning options:
- Actual Fraud. This means making a transfer or incurring an obligation “with actual intent to hinder, delay, or defraud any creditor,” including current creditors and probable future creditors.