One way in which irrevocable trusts come under attack during California trust litigation is under the theory of “fraudulent transfer.” When executed properly, an irrevocable trust can be used as an asset protection tool, making it difficult for the personal creditors of the decedent or grantor to reach the assets owned in the trust. If you are the trustee of an irrevocable trust in California and are facing litigation, a knowledgeable San Diego probate litigation attorney can help protect your legal rights.
What is the fraudulent transfer theory? This legal claim is based on the idea that the decedent or grantor transferred the asset into the trust solely to avoid creditors. A court overseeing such a claim will consider the following:
- What date was the trust created?
- What date or dates were the assets moved into the trust?
- Was the decedent or grantor of the trust insolvent at the time of the transfer?
- Was the decedent or grantor behind on payments to the creditor at the time of the transfer?
- Did the decedent or grantor have any reason to believe that liabilities or judgments would soon occur at the time of the transfer?
- Did the transfer leave the decedent or grantor insolvent?
- Even if the transfer occurred while the decedent or grantor anticipated liabilities, did he or she still have sufficient assets in his or her name after making the transfer?
In some cases, one of the trustees of the irrevocable trust in question may also be serving as the attorney for the trust. Beneficiaries and co-trustees in these instances should be aware that attorney/trustees cannot receive double compensation. Our article, California Trustees and Trust Attorneys: No Double Compensation, explains this concept in greater detail. Contact an experienced San Diego probate court attorney for a consultation. Call the Grossman Law Office today at (888) 443-6590.
AttorneyThe Grossman Law Firm, APC · 525 B Street, Suite 1500, San Diego, CA 92101 · (951) 523-8307