Legal Definitions - Uniform Fraudulent Conveyances Act

The Uniform Fraudulent Conveyances Act is a law created in 1918 to address situations where people who are unable to pay their debts try to transfer their assets to someone else in order to avoid having to pay their creditors. This is called a fraudulent conveyance.

The act distinguishes between two types of fraudulent conduct:

• Conduct that is presumed to be fraudulent, meaning that it is automatically considered fraudulent without any need to prove intent.
• Conduct that requires an actual intent to commit fraud, meaning that the person transferring the assets must have intended to defraud their creditors.

For example, if someone who owes a lot of money to their creditors gives away all of their valuable possessions to a friend or family member for no reason, that transfer would be considered a presumed fraudulent conveyance. On the other hand, if someone sells their car to a friend for less than it is worth in order to avoid having to use the money to pay their debts, that transfer would require proof that the person intended to defraud their creditors.

The Uniform Fraudulent Conveyances Act helps protect creditors by making it more difficult for debtors to transfer their assets in an attempt to avoid paying their debts.