Changes May Be Coming To Fraudulent Transfer Statutes

Florida’s fraudulent transfer law is for the most part the enactment of the Uniform Fraudulent Transfer Act. The Uniform act is adopted by most, if not all, states including Florida. On July 16, 2014, the National Conference of Commissioners on Uniform State Laws (NCCUSL) unanimously adopted the Uniform Voidable Transactions Act to replace the Unifrm Fraudulent Transfer Act.

NCCUSL consist of a group of law commissioners appointed by all the states to draft and revise uniform state laws, such as the Uniform Commercial Code Most states enact uniform laws adopted by the commission. Florida will likely implement the new uniform act.

At first look, the new law makes two significant changes. First, the law refers to wrongful transfers as “voidable” instead of “fraudulent.” The change formalizes a growing number of court decisions throughout the country that distinguished reversible fraudulent transfers from the tort of common law fraud and deceit. The term “fraudulent transfer” was a misnomer that imputed impropriety to asset protection planning, and it suggested that a fraudulent transfer imposed additional liability upon the debtor and attorneys other than the reversal of the transaction. The revised term, “voidable transaction” accurately portrays transfers that may be voided and reversed without assessment of compounded damages.

Another change in the new uniform act pertains to conflict of laws. The Uniform Voidable Transfer Act states, in Section 10, that a claim under the act is governed by the laws where the debtor resides when the transfer is made. This change would clarify what law applies to a creditor’s voidable transfer action against a Florida debtor’s transfer of an entity formed in a foreign state or his transfer to a transferee residing in another state. .

 

Last updated on May 22, 2020

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