Timeline for If a person knows they are going to die imminently, but owe money, can they take out the remainder of their savings as transfers to heirs while alive?
Current License: CC BY-SA 4.0
19 events
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| Mar 11 at 23:13 | history | edited | ohwilleke | CC BY-SA 4.0 |
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| Mar 11 at 11:47 | comment | added | JBentley | @MichaelHall " And if I can buy food, then why can't I buy a gift for my daughter?" This might be jurisdiction dependant, but in my jurisdiction the difference is in the exchange of consideration. With food, you get back something of equal value to what you paid (assuming it was an arms length transaction with a shop or restaurant). With a gift, you get nothing back. In bankruptcy proceedings, the gift transaction can be unwound but the food one cannot. | |
| Mar 10 at 19:38 | comment | added | Trish | @MichaelHall The ballpark number would be attorneys fees, which are easily in the 4 digits if the other party instantly agrees after just receiving one letter, and start at 5 digits up the moment this actually enters court - and very quickly going 6 digits. | |
| Mar 9 at 21:16 | comment | added | bdb484 | Fascinating stuff. I agree that the answer would be improved by incorporating at least some of the basics of this discussion. | |
| Mar 9 at 19:33 | comment | added | Michael Hall | I wasn't asking about jurisdiction, I'm asking about a reasonable ballpark dollar threshold. | |
| Mar 9 at 18:12 | comment | added | ohwilleke | @MichaelHall It is a widely adopted uniform law so its similar in almost every U.S. state. law.justia.com/codes/colorado/2022/title-38/article-8 | |
| Mar 9 at 17:58 | comment | added | Michael Hall | So where is that line drawn? | |
| Mar 9 at 17:39 | comment | added | ohwilleke | @MichaelHall " If the insolvent deceased bought their daughter a $5 scented candle for Christmas 3.5 years ago, is that subject to being voided?" In theory, yes. In practice, a de minimus transfer like that would not be worth litigating (a prevailing party does not get their attorneys' fees). | |
| Mar 9 at 17:34 | comment | added | Michael Hall | Those are both excellent answers that should be folded into the actual answer to make it "good"... Also, some clarity around scope would be nice. i.e. If the insolvent deceased bought their daughter a $5 scented candle for Christmas 3.5 years ago, is that subject to being voided? | |
| Mar 9 at 17:28 | comment | added | ohwilleke | @MichaelHall "What mechanism prevents the transaction? If it is voidable, how is it voided?" By bringing a lawsuit against the recipient under the Uniform Fraudulent Transfer Act. "And how far back does the voiding reach?" Usually four year from the date of the transaction for strict liability provisions and four years from knowledge of the transfer for intent based provisions. | |
| Mar 9 at 17:21 | comment | added | SJuan76 | @MichaelHall If you buy a Ferrari while owing money and die, the creditors will ask the state to liquidate the debts; if the state does not have liquidity they will impound the car. Or even, if the transaction is suspected (you buy a car but pay 10x the market price) the judge can order it reversed (the seller gets the car but has to return the money to the state). The voiding of a gift is a judge declaring that your daughter owes your creditor the amount gifted. | |
| Mar 9 at 16:50 | comment | added | Michael Hall | "I sort of assumed that outside of bankruptcy or some other legal proceeding, we are generally free to spend our money as we see fit, even if we have debt. This is not true." How is it not true? If my net worth is negative but I have cash in my checking account I can still buy food, right? And if I can buy food, then why can't I buy a gift for my daughter? What mechanism prevents the transaction? If it is voidable, how is it voided? And how far back does the voiding reach? (I trust you will eventually expand on this because you typically offer excellent answers, but DV for now...) | |
| Mar 9 at 15:49 | history | edited | ohwilleke | CC BY-SA 4.0 |
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| Mar 9 at 15:48 | comment | added | ohwilleke | "If I have a credit card bill owing, am I not free to buy my daughter a gift?" If a gift to your daughter renders you insolvent, it is a voidable gift. | |
| Mar 9 at 15:46 | comment | added | ohwilleke | @bdb484 "I sort of assumed that outside of bankruptcy or some other legal proceeding, we are generally free to spend our money as we see fit, even if we have debt." This is not true and contrary to Mark Johnson's observation, a specific intent to defraud is not required. If you make a transfer while insolvent or that renders you insolvent for less than substantially equivalent value, then you have made a fraudulent transfer (which is not always common law fraud). I've litigated and won the issue before in a case involving someone who gave away property to his parents before a murder-suicide. | |
| Mar 9 at 5:50 | comment | added | bdb484 | @MarkJohnson When you wipe out your assets before death, your intent is likewise not to commit a fraud -- at least not in the common-law sense of the word. At common law, fraud typically involves the tortfeasor's misrepresentation to the victim and the victim's detrimental reliance, neither of which is present in this scenario. | |
| Mar 9 at 5:35 | comment | added | Mark Johnson | @bdb484 When you buy your daughter a gift, your intent is not to commit a fraud. | |
| Mar 9 at 3:19 | comment | added | bdb484 | This is far outside my wheelhouse, but it strikes me as counterintuitive. I sort of assumed that outside of bankruptcy or some other legal proceeding, we are generally free to spend our money as we see fit, even if we have debt. If I have a credit card bill owing, am I not free to buy my daughter a gift? Does the answer change because I'm about to die? Or with them value of the gift? Or the value of the gift relative to my estate? I think this answer would benefit from elaboration. | |
| Mar 9 at 2:54 | history | answered | ohwilleke | CC BY-SA 4.0 |