How UFTA Affects Transfers

April 13, 2006

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In seeking to avoid challenges to your asset transfers--either as part of a comprehensive asset exemption plan or a strategic funding plan for a business--you must be aware of the Uniform Fraudulent Transfers Act (UFTA) and its implications.

All states have enacted a version of the UFTA. It is primarily through this act that creditors will challenge your asset transfers. Under the act, timing and motive (or intent), along with solvency, are critical factors in avoiding creditor challenges.

The UFTA outlaws two types of fraud:

When the transferor (such as the business entity) is solvent, actual fraud, in which the creditor must prove motive or intent, will likely be the more important of the two provisions, both in cases involving exemption planning transfers and transfers from the business entity.