My mother, who lived in NY, died of cancer this year.  I took care of
her for the last 3 months of her life and put her house up for sale in
an effort to get money to pay for her health care.  I was advised to
have my mother sign a deed with a retained life estate by my elder
care attorney.  We did this in case she passed prior to the house
closing so we could still move forward with the closing and not lose
the buyer. The deed was only to be recorded if she passed prior to
closing.  I was told that the house would pass into my name at time of
death and the house would not be a probatable asset.  I did not have
this life estate created to avoid her creditors, this was only the net
result of the life estate and I have the evidence that this was done
for elder care planning and not to defraud the creditors based on the
taped conversations with the lawyer who gave me the advice.

My mother passed the day before the house closing.  The house passed
to me at time of death and I closed on the house the next day and the
equity checks were written out to me as I was the owner of the house
at the time of closing.  My mother had many creditors (some
legitimate, and most that my brother forged her signature to open a
business) that did not get paid due to the fact that the house was her
only asset and the will was not probated.

Do the creditors have a legal case against me regarding fraudulent
conveyance?  All creditors have been contacted with Death Certificates
and a letter stating that there are no probate assets.

The definition of fraudulent conveyance that I found on
Investopedia.com is ?The illegal transfer of property to another party
in order to defer, hinder or defraud creditors.? And ?In order to be
found guilty of fraudulent conveyance, it must be proven that the
accused's intention for transferring the property was to put it out of
reach of a known creditor.?

Dear mebirkle-ga;

Thank you for allowing me to answer your interesting question. Let?s
consider the definition you offered:

?In order to be found guilty of fraudulent conveyance, it must be
proven that the accused's intention for transferring the property was
to put it out of reach of a known creditor.?

As with all criminal proceedings a suspect is considered, for all
practical purposes, to be innocent until PROVEN guilty. What that
means is the operative word in your statement is INTENT ? the state
must PROVE INTENT on your part to a jury in order to secure a guilty
verdict.

?A conveyance of property without any consideration of value, for the
purpose of delaying or ?bindering? creditors. Such a transfer will,
when proven to the satisfaction of judge or jury, be declared void.?
LECTLAW
http://www.lectlaw.com/def/f138.htm

If your actions were not deceptive and you were merely carrying out
the normal (read: legal) function of the executor of your mother?s
estate, and had no intent to defraud or deprive anyone from assets
rightfully theirs in the eyes of the law, you?ve probably done nothing
wrong under the Uniform Fraudulent Transfers Act ("UFTA"):

RISER ADKISSON LLP
http://www.fraudulenttransfers.com/

If, on the other hand, you DID, or it can be CONSTRUED that you did
intend to defraud or deprive a creditor of what is rightfully their
then you certainly have a problem.

What I suspect here though is that there is going to be a significant
problem (or at least a significant inquiry) where your brother?s
alleged indiscretions are concerned.  If you rushed to protect your
interests in the wake of your mother?s death because your brother has
so overextended his finances in your mother?s name, then the creditors
may indeed have a valid complaint (making charges against you
substantive). If successful in their pursuit of restitution or
compensation the creditor are successful, you may (unfortunately) have
to prosecute your brother (or sue him civilly) in order to recover
your interests in the estate from restitution HE should make to
replace the amount HE fraudulently obtained.

We cannot provide legal advice in this forum and I always like to add
the caveat: Consult your lawyer. Whenever one?s liberties or finances
are concerned this is always a universally good idea. On the other
hand, from a logical standpoint, you can always wait and see what
happens. If you?ve received threatening letters maybe they are blowing
smoke or just testing the waters. Of course, if you ever receive a
subpoena or summons it would be wise to immediately seek reputable
legal counsel.

What is clear is that you should be prepared to return the amount
should it ever be successfully challenged until you are completely
convinced or assured by an attorney that the validity of the transfer
is not longer being questioned.

According to William L. Comer, author of ?Freedom, Asset Protection &
You? "fraudulent conveyances under the Uniform Fraudulent Conveyance
Act are defined as those:

1. made when the transferor was insolvent or was rendered insolvent by
incurring an obligation or making a transfer and the obligation
incurred or the transfer made was without a fair consideration;

2. conveyances made without fair consideration when the transferor was
engaged in or about to be engaged in a business or transaction which
leaves the transferor with an unreasonably small capital;

3. conveyances made or obligations incurred without fair consideration
when the transferor believes he will incur debts beyond his ability to
pay as they mature, and

4. conveyances made or obligations incurred with actual intent to
hinder, delay or defraud either present or future creditors."

Generally, a fraudulent conveyance/transfer requires that you have the
intention of hindering, delaying or defrauding your creditors. Because
intent is difficult to prove, the courts have developed a set of
guidelines they use to determine if a transfer of assets without
adequate consideration is a fraudulent transfer. These are referred to
as "badges of fraud".
LAWSUIT PROTECTION: FRAUDULENT CONVEYANCE
http://www.rpifs.com/lawsuits/apfraud.htm

You would do well to read that article and this one before deciding if
you should consult an attorney:

LAWSUIT PROTECTION: ARE YOU SOLVENT?
http://www.rpifs.com/lawsuits/apsolvnc.htm

On a personal observation note: If I were you, and if the creditors
came for me, I?d most assuredly drag my brother right into the middle
of all this for having committed HIS fraud in the first place and
bleeding the estate dry, and I?d give him two choices:
(1)	He can tell HIS story under oath and take the heat off ME that way, or  
(2)	HE can cowboy up with the money the creditors are after and take
the heat off ME that way.
Either way I?m out of the frying pan?.But then again, you may feel
differently about that approach. It is, of course, up to you. As I see
it these two plans make up option #1. Otherwise Option #2 is to wait
and see if anything happens, and Option #3 is to hire a lawyer and
brace yourself.

I hope you find that my answer exceeds your expectations. If you have
any questions about my research please post a clarification request
prior to rating the answer. Otherwise I welcome your rating and your
final comments and I look forward to working with you again in the
near future. Thank you for bringing your question to us.

Best regards;
Tutuzdad-ga ? Google Answers Researcher



INFORMATION SOURCES

Defined above


SEARCH STRATEGY


SEARCH ENGINE USED:

Google ://www.google.com


SEARCH TERMS USED:

FRAUDULENT CONVEYANCE

UNIFORM FRAUDULENT TRANSFERS ACT 

UFTA

---

Request for Answer Clarification by mebirkle-ga on 24 Aug 2005 18:10 PDT

Dear Tutuzdad-ga,

Thanks so much for the work that you did on gathering the information
for me as well as your opinion of my situation.  It was very
informative and paints a very realistic picture of my position.

I would like to request that we keep this thread open a bit and I will
tip you the amount of the ?ask question? for another response from
you. Thanks for considering this and please don?t feel that you are
under any obligation to respond.  You've already earned the initial
charge for my initial question and have exceeded my expectations.

I believe that I have the proceeds of the sale of the house available
to me if needed to defend my position and I will consider the options
that you have listed below.  I have been told by the elder care
attorney that I worked with, and received the recommendation from,
that I should wait and see what happens and stay under the radar.  I
have been also been told to not touch the money and that there is a 6
year statute of limitations on Fraudulent Conveyance.

My follow-up question is:
Do you recommend that I build my defense strategy now before the shoe
drops?  If yes, what type of lawyer should I consult with?

I truly feel that I have not done anything wrong with my intentions
being pure and am prepared to fend off anyone that strikes and want to
be prepared for the worst.

Thanks again!

---

Clarification of Answer by tutuzdad-ga on 24 Aug 2005 18:37 PDT

From what I gather based on what you have told me and through my
research into your dilemma, I see no improprieties either ? but then
again, as I mentioned, and as our disclaimer below indicates, we
cannot by policy provide legal advice.

If I were in your position, knowing what I know, I would feel
relatively comfortable with the elder care layers advice. I think it
is wise to at least be PREPARED to defend yourself, which may include
compiling documentation, making copies, speaking to potential
witnesses and so forth. I really can?t say if you should run out and
secure legal representation just yet because I have no way of
appreciating the urgency here (as only you can). From a judicial
standpoint, what I do know from my decades of professional law
enforcement experience is that if one has enough foresight into a
certain legal matter to anticipate his opponent?s next move, he?s be a
fool not to act in his own behalf to get the advantage. In other
words, if you feel ?in your gut? (as you obviously do) that there is
even a remote possibility that you may be challenged, it?s best to
circle your wagons now while the details are still vivid and fresh on
your mind, documents can still be easily found and copied and you are
not backed into a corner so you can do these things to some extent at
your unburdened leisure.

As for the type of attorney you might wish to consult, you should keep
in mind that your creditors will have someone on their side that is
knowledgeable in matter both business and probate related. If you can
find a business attorney or probate attorney who has experience in
defending fraud cases I think you will have a good start.

Best of luck ? I look forward to your final rating and comments.

Regards;
Tutuzdad-ga

---

Clarification of Answer by tutuzdad-ga on 24 Aug 2005 18:48 PDT

Thank you so much for your generous tip! 

Regards;
tutuzdad-ga

I really appreciate the awesome answer that I received.  Thanks for a job well done!

You can review New York's fraudulent conveyance law on the New York
State Assembly website:
http://assembly.state.ny.us/leg/?cl=26&a=12

Where there may be an accusation of a fraudulent conveyance, the
statute can create a presumption of fraud without regard to your
actual intent:

------------------------
Section 273.  Conveyances by insolvent.

Every conveyance made and every obligation incurred by a person who is
or will be thereby rendered insolvent is fraudulent as to creditors
without regard to his actual intent if the conveyance is made or the
obligation is incurred without a fair consideration.
------------------------

The issue can thus be less a question of the purpose of the
transaction, and more one of whether the creditors find out about the
transfer which rendered the estate insolvent. Your attorney seems to
be advising you, through the "wait and see" approach, to try to wait
out the statute of limitations. If the creditors detect the transfer
and challenge it, you should be protected to a significant degree by
your decision to hold the funds. If not, following the expiration of
the statutory period, their potential claims should become
unenforceable.

Law firms which handle collections matters are typically very familiar
with the law of fraudulent conveyances.