Estate planning in New York is always a challenge, but in these times, it’s even more important. That’s because during economic downturns, people are much more likely to sue an estate. Part of this is simply human nature; individuals who have lost money want to get more from somewhere. Another issue is the source of payments. If payments have come from people now going through bankruptcy, other parties may seek to claw those back.
High net worth individuals always need to have one eye on protecting the resources they’ve accumulated. Estates are subject to taxes, which is one reason why wealthy individuals need to be prudent about how they’re dealing with assets. The other is because of something called fraudulent conveyance laws.
Fraudulent conveyance laws deal with the transfer of assets. Explicit fraud occurs when someone transfers assets that they know a creditor will be looking for. There’s also constructive fraud, which deals with the details of an exchange. In order for a contract to be valid, each party must receive proper consideration. In constructive fraud, one party transfers an asset to another without receiving something of equal value in return.
There are ways to avoid being dinged by fraudulent conveyance laws when it comes to estate planning. The courts have recognized that it’s appropriate to establish a trust for children, spouses or other inheritors. There are also annuities. It’s considered proper to exchange an asset for an annuity that pays interest while protecting the principal from claims.
For people with complicated estates and multiple valuable holdings, it may be a good idea to get professional advice. An experienced estate planning lawyer may create the necessary documents or update older documents depending on an individual’s needs and goals.