A fraudulent conveyance (or fraudulent transfer) is a transfer of assets made to hinder, delay, or defraud creditors. If a court finds a transfer fraudulent, it can unwind it and hand the assets to the creditor as if the transfer never happened. Every US state has a version of this rule, most under the Uniform Voidable Transactions Act, and equivalents exist across the common law world.
Two flavors exist. Actual fraud means transferring assets with intent to defeat a known creditor, and courts infer intent from "badges of fraud": the transfer happened after a claim arose, went to an insider, left the debtor insolvent, or was hidden. Constructive fraud needs no bad intent at all; transferring assets for less than fair value while insolvent qualifies on its own.
This doctrine is the boundary line of all asset protection planning. A trust funded years before any claim exists is planning. The same trust funded the week after a lawsuit lands is a fraudulent conveyance, and courts will reach it, sometimes jailing the settlor for contempt along the way. Timing is nearly everything.
Offshore jurisdictions compete largely on how they rewrite this doctrine. The Cook Islands requires creditors to prove fraudulent transfer beyond reasonable doubt, bars claims filed more than one year after the transfer, and immunizes transfers made more than two years after the cause of action arose. Nevis mirrors those rules and adds a US$100,000 bond before a creditor can even sue. Belize abolished the cause of action for its international trusts entirely. None of this protects transfers that were fraudulent where and when they were made against creditors who act fast, and no reputable trustee will accept assets from a settlor already being sued.
Related terms: spendthrift trust, charging order, settlor.