Trusts are an important and helpful estate planning tool to pass assets on to a loved one. However, you will need to be careful about what assets you place in the trust. The following will examine in further detail what an illegal trust conveyance is, what can happen as a result and how you can avoid the situation.
What is an Illegal Trust Conveyance?
An illegal trust conveyance refers to someone unlawfully moving assets into a trust, often as a means of avoiding taxes or paying creditors. Illegal trust conveyances are also called fraudulent transfers or a fraudulent conveyance. There are several examples of how illegal trust conveyances can happen. These include the following:
- An individual transfers assets to a trust to avoid paying taxes or paying creditors
- Someone abuses their Power of Attorney privileges
- Forging estate planning documents
- Lying about property ownership
Transfer of assets to a trust to avoid paying taxes or paying creditors
As mentioned above, many cases of illegal trust conveyance occur when someone knowingly transfers assets to a trust with the intent of avoiding taxes or paying creditors. This can lead to penalties not only for the trustor, but potentially for the beneficiary too.
Abuse of Power of Attorney privileges
Another example of illegal trust conveyance can occur when someone who has Power of Attorney privileges abuses that by transferring assets against the wishes of and unbeknownst to the incapacitated grantor.
Forging estate planning documents
People can create fraudulent estate planning documents with falsified signatures to make it appear as if they own assets they do not. As a result, those committing fraud could illegally transfer assets.
Lying about property ownership
Similar to the above, this occurs when someone pretends that they own property that they do not, which in turn can lead to illegal transfers.
What Can Happen as the Result of an Illegal Trust Conveyance?
Illegal trust conveyance is a serious matter, and can result in someone getting sued and facing multiple other penalties in civil court. If the illegal trust conveyance is part of a larger string of crimes, such as fraud, money laundering or tax evasion, then criminal charges could be in play – and potentially even imprisonment.
Illegal trust conveyance can also have significant consequences in regard to personal or business credibility, and can potentially lead to the loss of certain licenses in the case of businesses.
How Do You Avoid an Illegal Trust Conveyance?
Simply put, to avoid illegal trust conveyance, you will want to have knowledge of all the assets you are transferring and the laws surrounding the transfer of those assets. In some cases, individuals have found themselves accused of illegal trust conveyance despite not having bad intentions, but instead, not having knowledge of the regulations and laws surrounding asset transfers.
For any questions regarding trusts and moving assets, or any of your other estate planning needs, we are here to help. Contact us today to learn more about how we can work with you.
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