Q: How can I protect my farm from being seized due to my corporation's financial issues?

A: Unless you pledged your far as collateral for the corporation, you should be fine. The corporation is a separate entity altogether and your personal assets are not at risk unless you pledged them or there is some kind of fraud involved which would allow them to pierce the corporate veil.

A: The timing of any transfer is critical when considering protection of your farm from corporate creditors. Many states have a 4-year statute of limitations for fraudulent transfer claims, though California's lookback period can extend up to 7 years depending on circumstances. This timing factor significantly impacts the viability of your asset protection strategy.

Transferring your farm to a revocable trust for your daughter requires careful consideration of several legal factors. When properly structured, a revocable living trust can serve as a primary tool for farm transfer, but requires formal transfer of title and appropriate documentation to "fund the trust." However, be aware that California's Uniform Fraudulent Transfer Act (UFTA) is designed to prevent debtors from transferring assets before creditors can reach them, and a transfer could be deemed fraudulent even before a lawsuit is filed.

Your best approach would be to consult with an attorney experienced in both asset protection and agricultural law to develop a proper strategy. Timing is critically important as creditors frequently use the timing of transfers to establish intent to defraud, making it essential to engage in asset protection planning well before anticipated creditor claims. The attorney can help you explore alternatives such as different trust structures, family limited partnerships, or other asset protection vehicles that might better shield your farm while complying with legal requirements.

Remember that if you sell an asset for less than fair market value while insolvent, a court may find constructive fraud even without fraudulent intent under California Civil Code § 3439.04(a)(2). To avoid this risk, ensure any transfer includes receiving reasonably equivalent value for the farm property.