Litigation and Creditor Protection Strategies Flashcards
7 cards from real APP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Litigation and Creditor Protection Strategies flashcards as text
What is the primary legal purpose of asset protection planning?
Answer: To lawfully structure assets so they are less accessible to future creditors
Asset protection planning legally structures assets before claims arise to make them less accessible to future creditors, not to defraud existing ones.
Which legal doctrine allows courts to set aside transfers made to defraud creditors?
Answer: Fraudulent conveyance
The fraudulent conveyance doctrine enables courts to void transfers made with the intent to hinder, delay, or defraud creditors.
A 'charging order' against an LLC membership interest typically does what for a creditor?
Answer: Limits the creditor to receiving distributions if and when they are made
A charging order is the exclusive remedy in most states; it only entitles a creditor to receive distributions actually made to the debtor-member, not to control the LLC.
Under the Uniform Voidable Transactions Act (UVTA), what is the standard look-back period for transfers made with actual intent to defraud?
Answer: 4 years
The UVTA generally provides a 4-year statute of limitations (or 1 year after discovery) for claims involving actual fraudulent intent.
Which of the following assets is typically exempt from creditor claims under most U.S. state laws?
Answer: Qualified retirement plan assets (e.g., 401(k))
ERISA-qualified retirement plans such as 401(k)s are broadly protected from creditors under both federal and most state laws.
How does 'tenancy by the entirety' (TBE) protect marital property?
Answer: It shields the property from the individual debts of either spouse acting alone
TBE treats spouses as a single legal unit, so a creditor of only one spouse cannot attach or force the sale of TBE property.
Which badge of fraud most strongly suggests a transfer was made with intent to hinder creditors?
Answer: The transfer was made to a family member shortly before a lawsuit was filed
Transfers to insiders (family members) for less than reasonably equivalent value shortly before or after litigation are classic badges of fraud courts scrutinize closely.