Let us say someone owes a lot of money is a lawsuit or whatnot and they decide to let a relative hold on to their money so they don’t have to pay. Is this legal in any sense. Could I say legally let a friend hold 100 grand in their own account for me to avoid some type of garnishment. I supposed also you could just give the money to them, making it legally there own money, but in real life you actually continue to control it, though you would probably have to pay some big taxes on it following this path. Would this be legal?
Sounds like a fraudulent conveyance to me.
Although I’m not sure whether that term is used outside bankruptcy law.
But is it different if we are talking about money owed from say a lawsuit as opposed to creditors?
The link also says this:
Although such conveyance is void as regards the purchaser and creditors, it is valid as between the parties and usually valid as to subsequent innocent purchasers. For example, one company may transfer a house to a related company to avoid a judgement giving the house to a 3rd party. However, subsequent innocent purchases/transfers of the house will often be valid.
So it sounds like it could be done, if one had enough people involved.
We talked about this here: http://boards.straightdope.com/sdmb/showthread.php?t=360440
Note that it says “innocent purchaser.” That means someone not involved in your fraudulent scheme. And it would also mean that your assets are no longer in your control “in real life.” Furthermore, for there to be an innocent purchaser, there has to be some property or chattels being conveyed. Merely receiving cash is not a purchase.
Ok just note that I’m not talking about creditors I’m talking about money owed in a lawsuit if it makes a difference and I’m strictly talking about cash.
Under the law, there’s not much difference between a “creditor” and “money owed in a lawsuit.” In both cases, someone has gone to court and obtained a judgment ordering you to pay.
If someone holds a judgment against you and you give away all your assets to someone else, there are ways for the person holding the judgment to get at those assets.
Furthermore, you’re setting yourself up for some kind of criminal liability in addition to the civil liability that has already been imposed.
As has been pointed out, anyone to whom you owe money (for whatever reason) is a creditor.
There are ways to shield your assets from legal judgements and garnishments, but you have to have it set up well in advance of any legal action. If you have the assets when the court makes the judgement, giving them away will only result in those assets being seized from whoever is holding them.
And of course, even if it were legalt, to even contemplate such a scheme you’ve got to trust the buddy you’re giving the money to. Because if you’ve given him the money to such a degree that the courts deem it his money and not yours, then it’s his money. What incentive does he have to give the money back?
No. Suppose you deed your house to your brother for a dollar because you are being sued. Your brother then sells the house for $500,000 to an innocent third party and puts the $500,000 in his bank account.
Even if the innocent third party is safe, your brother will be in the hook for the $500k.
No difference at all. Hell, for your creditors to collect the money they will have to file a lawsuit. If you own property and have a judgment against you, most of the time, the judgment will be registered and can count as a lien on your property.
Bankruptcy fraud is not at all uncommon, and in many cases, it occurs exactly like that; hiding of assets.