What is a fraudulent transfer?

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.

Related link:

• Is it too late to protect my assets once I am sued or have a potential liability?