A fraudulent conveyance is the transfer of property for with the intent of delaying or defrauding a known creditor. If such a fraudulent intent can be proven, the creditor may bring a lawsuit to void the transfer. However, if the transfer was made without knowledge of the claim or before a debt has matured, for other legitimate reasons, and/or in the normal course of business, then the creditor will usually be unable to set aside the conveyance.
To ascertain the debtor’s purpose and intent of a property transfer courts look to factors which are often indicative of intent to avoid creditor claims. For example, a court will examine whether any particular transfer was made to a debtor’s family member; whether a transfer was concealed; whether the debtor retained effective use or control over the property transferred; and, whether the transfer rendered the debtor insolvent. All of these above factors suggest that a transfer was a fraudulent conveyance which the courts should reverse.
