A conveyance of property between husband and wife or between the debtor and a close family member is presumed to be fraudulent as to creditors and will be set aside unless the good faith of the transaction is established by a preponderance of the evidence. Financial condition of debtor at time of transfer When a debtor in failing financial circumstances voluntarily conveys property of value to a close relative, a presumption arises that the conveyance is fraudulent. See U.S. v. Ressler , supra. Further, to create a presumption that debtor's voluntary conveyance was fraudulent, the judgment creditor does not need to establish that the debtor was actually insolvent at time he made the conveyance. Insufficient consideration paid for the transfer Another key factor in determining if a transfer is fraudulent is the consideration paid for the property conveyed.
Insufficient consideration is a badge of fraud.
Once the badges of fraud set forth above have been established by the creditor, the burden of proof shifts to the debtor to show that the transfers were made in good faith and for value. The Crime Control Act is a federal statute that provides the FDIC and RTC with specific authority to seek the issuance of injunctions and the appointment of receivers as well as the voidance of fraudulent transfers. A transferee who takes in good faith for a reasonably equivalent value can defeat an action to set aside the transfer. Likewise, under the case law decided prior to the adoption to the UFTA, such a showing was a defense to an action to void a transfer claimed to be fraudulent. For transfers made with actual intent to defraud, hinder or delay creditors, the action must be commenced within four years of the transfer or, if later, within 1 year of discovery.