Judgment Proofing Assets

The time to take care of the business of making yourself and your company judgment proof is not after the judgment has been issued.  Due to the prohibition against fraudulent transfers (typically determined by the timing of the transfer in relation to a judgment) one cannot simply move assets once a judgment has been issued.  Texas, and 43 other states have adopted the Uniform Fraudulent Transfer Act of 1984 (11 USCA sec. 548 et seq.) which prohibits transfers of assets in order to defraud creditors.   If the intent to defraud is proved, a court can set aside the transfers, even though consideration has been paid by a third party for the asset. 

Generally, if the (1) item has value out of which the creditor could have realized a portion of its claim from; (2) the item was actually transferred or disposed of by the debtor; and (3) the transfer was done with actual intent to defraud the creditor, the transfer or sale can be set aside by the court. 

Therefore, one should not wait until a judgment is obtained before making plans to protect assets, whether personal or corporate.  Depending on your individual situation, the protection may take on several forms. Some protections are as simple as obtaining an umbrella insurance policy to expand your coverage such that your personal or company assets are not at risk.  Other protections involve trusts and conveyances that would require an attorney.