Challenging Fraudulent Transfers in Estate Cases

 Posted on June 18, 2024 in Estate Planning and Probate

When people pass away, their assets are distributed to their beneficiaries according to the terms of their will or trust. However, in some cases, there may be concerns that certain assets were improperly transferred out of the estate before the person's death in order to avoid distributing them to the rightful heirs. These types of transfers, known as fraudulent transfers, may be challenged through probate litigation. A Texas lawyer can help you with this.

What Is a Fraudulent Transfer?

A fraudulent transfer occurs when a person transfers assets out of that person's name to another party to shield those assets from creditors or avoid distributing them to that person's beneficiaries after his or her death. Under Texas law, a transfer may be considered fraudulent if it was made with the intent to hinder, delay, or defraud any creditor of the decedent. Fraudulent transfers may involve real estate, bank accounts, vehicles, or other valuable property. Fraudulent transfers can take many forms, such as:

• Selling assets for less than their fair market value
• Transferring the title of property to a family member or friend without receiving payment
• Gifting away assets shortly before death despite being insolvent
• Concealing assets from the probate court and beneficiaries

Proving Fraudulent Intent

Successfully challenging a fraudulent transfer in probate litigation requires proving that the transfer was carried out with the intent to defraud creditors or beneficiaries. Under the Texas Uniform Fraudulent Transfer Act, courts can consider several factors in determining fraudulent intent, including:

• If the transfer was made to an insider, such as a relative or business partner
• If the decedent retained control or possession of the property after the transfer
• If the transfer was concealed from interested parties
• If the decedent was sued or threatened with a lawsuit before making the transfer
• The value of the consideration received in comparison to the asset's fair market value
• The decedent's solvency at the time of the transfer or shortly after that

Remedies for Fraudulent Transfers

If a court determines that a fraudulent transfer occurred, it can take action to undo the transfer and return the assets to the decedent's estate. The court may order that the transferred property be turned over to the estate's executor or administrator to be distributed appropriately according to the will or the laws of intestate succession.

If a fraudulent transfer was made to a family member or other insider, the court may hold that person liable for any losses suffered by the estate and its beneficiaries. The person receiving the fraudulent transfer can be required to reimburse the estate or pay damages.

Contact a Bexar County, TX Estate Planning Attorney

Fraudulent transfer issues can quickly complicate the probate of an estate. Beneficiaries who suspect assets were improperly transferred to avoid creditors or legal distribution should promptly discuss concerns with a Comal County, TX estate planning lawyer. Call Geoff Mayfield, Attorney at Law at 210-535-0870 to schedule your free, no-obligation consultation.