How are a Fraudulent Conveyance and a Creditor Defined?

Full question:

I have a tolling agreement that has been extended several times with an estate lawyer I intend to sue for legal malpractice...as soon as the trust accounting is complete. Since the tolling, she has moved all her money into a trust. Is this fraudulent conveyance? Does the announcement of tolling and also prior to that official demand letters for fee return prove I'm a creditor enough or must the lawsuit have been filed?

• Category: Debts and Credit
• Date: 04/07/2025
• State: California

Answer:

Whether you qualify as a creditor depends on the context and applicable laws. For example, a creditor is defined by the bankruptcy code as an "entity" which holds a "claim" against the debtor which arose before the commencement of the bankruptcy case. A "claim" is broadly defined by the bankruptcy code to include a right to payment whether reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.

The elements of a fraudulent conveyance transfer are defined as follows by the Uniform Fraudulent Transfer Act:

(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:

(1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or

(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or

(ii) intended to incur, or believed or reasonably should have believed that he [or she] would incur, debts beyond his [or her] ability to pay as they became due.