Legal Question in Business Law in California

Re: incorportion

Transferring assets to anyone (a corporation, your kids, a trust, John Doe) without getting fair value in return is fraudulent if the purpose, or the effect, is to make it harder for your present or feared creditors to collect. Such transfers are covered by very broad language in the Uniform Fraudulent Transfer Act, codified in California as Civil Code sections 3439 to 3439.12.

I strongly suggest that you look up the UFTA and study it. Learn what is prohibited, and what the penalties are. Note that both the transferor and the transferee are subject to penalty.

The best way to prevent a transfer from being illegal as fraudulent is to receive full value in exchange - get $1 in cash for every $1 worth of property transferred. That takes away the fraud aspect, but of course it buys you no "protection."

Basically, this law and others have been designed by the legislatures and to some extent the courts of appeal of the various states to prevent folks from doing exactly what you have in mind. You are not the first one to think of it, and the many loopholes that have been found and tried by debtors over the centuries have been plugged sooner or later after they were found.

This is not to say that some clever rascals are not successful in hiding assets from creditors. My point is that it's illegal (civilly, if not criminally) and hard to get away with, especially with real estate, which can't be physically hidden and where there is a highly visible paper trail of ownership.