Every state has fraudulent transfer laws. Some call it the
Uniform Fraudulent Conveyance Act (UFCA), and others the
Uniform Fraudulent Transfer Act (UFTA).
Fraudulent transfers or
fraudulent conveyances laws can be interchangeably discussed here since they are so similar.
The fraudulent transfer laws essentially let a judgment creditor unwind
transfers previously made by a debtor so that the fraudulently transferred
property can be claimed by the creditor. In other words, given certain
circumstances, courts invalidate and revoke prior sales, gifts or other
transfers. Whatever assets the debtor sold or gave away for less than
fair value are then re-transferred to the judgment creditor. Fraudulent
transfers then partially or totally destroy your protection.
For effective protection, you must
safely title your wealth. That's the only way to keep your wealth
beyond the reach of your creditors. Judgment creditors trying to seize a debtor's
wealth often use the fraudulent transfer laws to seize assets the debtor
previously transferred. The fraudulent transfer may be to a spouse, other
relative, friend, corporation, partnership, trust or anyone else. Whether
the creditor can succeed on their fraudulent transfer claim chiefly depends
on whether the creditor can convince the court that the transfer was simply
a last-ditch effort to defraud the creditor.