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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 37824
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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Here is my question which is a refinement of what I asked you

Resolved Question:

Here is my question which is a refinement of what I asked you earlier today. My wife has money in an insurance trust which is protected against creditors. She and I are considering transferring a large amount of that trust to make substantial improvements on a house that is held in a QPRT (separate from the property to be foreclosed) and, we believe, not a result of a fraudulent conveyance.

The question is if we make this transfer from one trust to another, would it be considered a red flag or a fraudulent conveyance and thus seizable. If we do not transfer the funds and wait for the foreclosure issues to be settled, we risk losing the building permits which are difficult to secure.

Would you proceed with the building or wait?
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 6 years ago.

If the trust is protected, then removing it does not make a fraudulent transfer, because you are not moving the money to "defraud, hinder or delay" any creditor, since the money is moving from one protected status to another.


I think this transaction is okay, but frankly, if there's a lot of dough involved, I would want to do some substantial research into the case law to determine if there were any "gotchas" here. Massachusset's homestead exemption, fyi, is $500,000 -- assuming that it mattered, which based on your stated facts, it apparently doesn't.


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Customer: replied 6 years ago.
There would be about $700K moved from one trust to the other. The funds would be paid directly to the builder from the insurance trust and the improved property would be in the QPRT. Do you suggest I contact an attorney for further research, and if so, would that be a Massachusetts or Florida attorney, and would it be a bankruptcy attorney?

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