Fraudulent Transfers

Estate planning involves many decisions regarding how a person’s property should be distributed upon death or disability. These decisions should be informed and carefully considered, and seeking legal counsel may ensure that the estate is adequately protected. However, in some cases, property is transferred through deception or to avoid creditors. Fraudulent transfers can involve real property, corporate stock, bonds, bank accounts, and even gifts or bequests made due to coercion or undue influence. Fraudulent transfers can result in complicated and thorny lawsuits. Jules Haas is a seasoned New York City estate litigation attorney who represents heirs and creditors interested in challenging fraudulent transfers into or out of an estate.

Elderly or incapacitated persons may face pressure and undue influence to change the disposition of their property. When these people alter the terms of their will to benefit a caregiver, the heirs may suspect that the caregiver placed unlawful pressure on the patient, resulting in a fraudulent transfer. For example, your stepfather was providing care to your mother. After she had passed, you discovered that she allegedly changed her will to leave her entire estate to your stepfather, including the house she had purchased for you to inherit. If your mother was suffering from dementia at the time of the transfer, you may believe that your stepfather fraudulently influenced the decision.

As the beneficiary or heir of an estate who suspects certain assets were transferred by means of deceit or undue influence, you are entitled to bring a claim before the Surrogate’s Court in New York City. Your lawyer can petition the court for the recovery of the asset at issue on the grounds that it was fraudulently transferred.

Personal representatives owe a fiduciary duty to the estate and beneficiaries, and may be held accountable when they breach this duty by fraudulently transferring assets from the estate. For example, if a personal representative transfers money from your father’s estate into her own bank account to obtain a financial benefit, the court may determine that a fraudulent transfer occurred.

In New York, fraudulent conveyance laws safeguard creditors from circumstances in which someone transfers property or assets to the creditor’s disadvantage. The transfer may be made with or without actual intent to defraud.

Under the New York Debtor and Creditor Law, when any defendant transfers property to avoid a judgment creditor, the transfer is fraudulent and may be recovered through a court action. Debtor and Creditor Law section 273 provides that conveyances that leave a debtor insolvent and that are made without fair consideration are fraudulent to creditors irrespective of a debtor’s intent. Debtor and Creditor Law section 275 states that obligations and conveyances without fair consideration are fraudulent when a debtor thinks he will become indebted beyond his ability to pay. Debtor and Creditor Law section 276 sets forth that any conveyance is fraudulent where it is made with actual intent to defraud, delay, or hinder present or future creditors.

Under Estates, Powers & Trusts Law (EPTL) section 7-3.1, a disposition in trust for the use of a grantor is void with regard to currently existing or subsequent creditors of the grantor. In other words, you cannot transfer your assets to a trust and continue to keep control or get benefit out of the trust while also being protected from creditors’ claims. A transfer is only valid for the purpose of protecting assets from creditors if a grantor doesn’t reserve a power to revoke the trust or dispose of property during his lifetime, and where transfers to the trust did not make the grantor insolvent.

If you are concerned about fraudulent transfers in New York City, you should discuss your situation with lawyer Jules Haas. Mr. Haas possesses more than 30 years of experience handling New York estate litigation. He represents people in Manhattan, the Bronx, Queens, Kings, Richmond, Nassau, Suffolk, and Westchester Counties, and provides a free case review along with reasonable fee arrangements. Call us at (212) 355-2575 or contact us through our online form.