In high-asset marriages, trusts are sometimes used as a legal shield to protect the couple’s wealth. However, in some instances, a trust is not a legitimate tool for asset preservation but a vehicle for a fraudulent transfer. A fraudulent transfer, in this context, is an improper movement of assets into a trust with the intent to improperly remove those assets from the marital estate. For a family law attorney, recognizing the indications of such misconduct and knowing how to address it is essential for protecting a client’s financial future.
LeAnne M. Gilbert, an attorney at Gaslowitz Frankel, notes that the firm is often brought in by a family law attorney when a trust is involved and there is a question about whether the trust was fraudulently created or whether assets were transferred in a fraudulent manner. “In these cases, the party who did not create the trust will seek to set aside the trust or transfers of assets into the trust to bring those assets back into the marital estate for equitable division,” says Gilbert. “This is a critical point in the legal process,” she adds.
An attorney who does not have a comprehensive understanding of trusts and fraudulent transfers can miss key details that could prove to be the most valuable part of the case.
Proving Fraudulent Intent and Improper Transfers
Fraudulent transfer is a serious allegation and whether a spouses funded their trust with the intent to defraud current or future creditors, including their spouse, is a question of fact. In many of these situations, the fraudulent intent is not immediately clear. For instance, a spouse may have received legal advice from an asset protection advisor who failed to inform them that their partner could be considered a potential creditor in a future divorce. Consequently, a trust created with good intentions might still be subject to challenge if its funding history reveals improper transfers or a lack of proper legal formalities. For example, a spouse may have failed to properly transfer the title of real property into the trust, leaving it vulnerable to being pulled back into the marital estate. As a firm, Gaslowitz Frankel has been able to pull assets out of trusts in these situations simply by proving they were not properly titled.
The stakes in these cases are incredibly high. A family law attorney must be prepared to litigate the validity of the trust, its management, and the transfers into it. This requires more than a standard understanding of divorce law; it demands an intricate knowledge of trust law and the principles of fiduciary duty. Gaslowitz Frankel provides the expertise necessary to develop the legal theories and obtain evidence to challenge the opposing side’s position. In one recent case, a husband put a trust agreement in front of his wife, and she signed it without realizing that she would personally responsible for all the taxes generated by the trust. Gaslowitz Frankel worked with her divorce counsel and successfully set aside three trusts, resulting in a $15 million award for the client.
A Collaborative Approach to High-Stakes Litigation
This type of partnership also benefits a family law attorney who may not have the expertise to go all the way to a jury trial. Gilbert notes that the firm often serves as consulting experts, working in the background to provide advice and, if necessary, expert testimony. “This strategic collaboration provides the family law attorney with a clear path forward, allowing them to focus on their core practice while we navigate the intricate trust issues,” says Gilbert.
The attorneys of Gaslowitz Frankel have years of expertise in handling the complex issues surrounding will, trust, estate, business, and securities disputes. For trusted estate law and fiduciary legal guidance, consult with the attorneys of Gaslowitz Frankel.
