I like to point out how Do-It-Yourself lawyering can be very costly - when it comes to protecting your family and your assets, it is really an area where people can be penny-wise and pound foolish. Unfortunately, when you or your family need the protection of a well constructed plan is when the shortcomings will be sorely felt.
Individuals and businesses will sometimes take steps in order to protect some of their assets from potential liabilities and/or creditors. Asset protection planning is nothing new, and, if done right by an experienced professional can be legal, ethical and provide the desired security.
The Courts, however, are none too pleased to see people playing shell games solely for the sake of hiding an asset. There is a whole set of Federal and State statutes which deal specifically with the concept of a "fraudulent conveyance" or fraudulent transfer of assets. In bankruptcy proceedings, for example, any transfer of assets occurring within a specified time of the bankruptcy filing will be scrutinized and will often be voided, bringing the asset back into the pool available to the bankruptcy creditors.
The Do-It-Yourself brand of asset protection can sometimes take amusing turns. As this December 23 decision of the Wisconsin Court of Appeals illustrates, you can't give away your asset and have it, too! Although Jezeski v. Jezeski involves a transfer to protect assets from an ex-spouse in a divorce proceeding, the decision bears import with regard to evading creditors of any kind.
Stanley Jezeski was about to divorce his wife, Rosalie, so he "gave" a parcel of land to his brother, Thomas, under a contract that called for Thomas to "sell" the land back after the divorce was finalized. The idea was that Stanley would go through the divorce, lose whatever he had to lose, but get to keep his prized parcel of land.
Once the divorce was final, Stanley wanted his land back (can you see where this is going?), but Tom said "no can do, mon frere." As it turns out, Thomas refused to honor the contract and decided to keep the land for himself. So Stanley sued his brother Tom to enforce the contract.
Ultimately, Rosalie did not get the land, but then, neither did Stanley. The Court held that Stanley could not enforce the contract because it was a fraudulent contract in the first place, created for the sole purpose of defrauding the Family Court.
So, lucky Tom. He got the land. He might have let Stanley continue to hunt it, too, if it weren't for that d*#d lawsuit.
Attorney Kevin W. Davidson is a Wisconsin probate, wills, trusts and estate planning attorney with The Estate Planning Group, LLC / Davidson Law Office, LLP – Wisconsin estate planning attorneys who provide Life & Legacy planning helping Wisconsin’s families plan for an uncertain future so they can stop worrying and start living, with offices in Appleton, Kaukauna and Green Bay (coming soon to Kimberly!). Call us if you’d like our family of professionals to help you ensure your family and your legacy are protected no matter what happens.