By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Medicaid Attorney

In Part 1 and Part 2 of this series I began discussing a case taken up on appeal between a nursing home and the owner of a home accused of receiving a fraudulent transfer. Let’s further delve into the case now.

On appeal, the nursing home contended that the defendants violated the UFTA (Universal Fraudulent Transfer Act). The appellate division stated in its decision “the general rule is that findings by a trial court are binding on appeal when supported by adequate, substantial, credible evidence. Deference is especially appropriate when the evidence is largely testimonial and involves questions of credibility.” The trial court enjoys the benefit, (which an Appellate Court does not), of observing the parties’ conduct and demeanor in the courtroom and in testifying. Through this process, trial judges develop a feel of the case and are in the best position to make credibility assessments. As a factfinder, the judge can believe all, some, or none of a witness’ testimony. The appellate decision will defer to the credibility assessments unless they are manifestly unsupported by the record. Here there’s no reason to disturb the judge’s ruling. The Appellate Judges were satisfied that the record amply supported the judge’s factual and credibility findings.

The Uniform Fraudulent Transfer Act (UFTA) provides as follows:

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:
  • 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
  • Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtors ability to pay as they become due.

The purpose of the UFTA is to “prevent a debtor from placing his or her property beyond a creditor’s reach” to cheat a creditor and to “allow the creditor to undo the wrongful transaction so as to bring the property within the ambit of collection.”

To determine if a conveyance constitutes a fraudulent transfer, courts must engage in a two-part test. First, the court must inquire “whether the debtor (or person making the conveyance) has put some asset beyond the reach of creditors which would have been available to them” if there had been no conveyance. Second, the court must inquire “whether the debtor transferred the property with intent to defraud, delay, or hinder the creditor.” This test requires the court to consider the totality of the circumstances in each case.

In my next post I will continue with the discussion of the Appellate division and the outcome of the case.

To discuss your NJ Fraudulent Transfer matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.