The Uniform Acts' Loophole in Fraudulent Conveyance Law
Estate Planning, 2007
8 Pages Posted: 15 Sep 2007 Last revised: 24 May 2010
This article illuminates a glitch in the Uniform Disclaimer of Property Interests Act of 1999 (UDPIA) which allows persons to disclaim not only inheritances but, in one special circumstance, part of their own, preexisting ownership interest in property. The article suggests a strategy whereby an insolvent debtor can exploit this glitch to put property out of the reach of creditors and thereby to employ disclaimer law to effect what would otherwise constitute a per se fraudulent conveyance. In the process, the article analyzes the legislative history of UDPIA to show how the glitch found its way into this Uniform Act and also offers a novel analysis of the legality of insolvent disclaimer generally under the text of UDPIA. Further sections of the article weigh the advantages and shortcomings of the proposed asset protection strategy in comparison to alternative ones already in use, including analysis of the availability of the strategy to debtors who do not themselves reside in a UDPIA jurisdiction and the viability of the strategy for debtors who enter a bankruptcy proceeding.
Keywords: asset protection, disclaimer, disclaimer planning, fraudulent conveyances, creditors' claims, creditors' rights, bankruptcy planning
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