Fraudulent Conveyance

Just because an individual in debt makes a conveyance of his or her property does not mean that it is a fraudulent conveyance. Whether a transaction constitutes a fraudulent conveyance depends upon the existence of the intent to defraud at the time that the challenged transfer was made. Because it may be difficult for the courts to determine an individual's intent, rules have been established to help in the process. Such rules are called "badges of fraud." For example, if the TRANSFER OF ASSETS was concealed, an inference of FRAUD can be made. The failure to record a conveyance, such as a deed to land, might indicate the existence of fraud. Another example is if the transfer included virtually all of the debtor's assets.

If a voluntary conveyance renders a debtor insolvent or leaves the debtor without the means of paying the debts existing at the time of the conveyance, it is fraudulent and without any legal effect, regardless of the intent of the parties.