Fraudulent Conveyance Results in Constructive Trust
In Wilmington Savings Fund Society v. Kaczmarczyk, (Del. Ch., March 1, 2007), 2007 WL 704937, read opinion here, the Delaware Chancery Court granted a constructive trust regarding proceeds from the sale of property that the court determined was a fraudulent conveyance of jointly held property by a husband and wife. The husband fraudulently conveyed the property to his wife in order to avoid a claim by the bank--and after the bank had filed suit against him. The court was not persuaded by the argument that the wife used inheritance money as a down payment to buy the house.
This is the first Delaware decision to interpret Section 1305 of Title 6 of the Delaware Code, which is the Uniform Fraudulent Transfer Act ("UFTA"). The UFTA was adopted in Delaware in 1996, and since then no reported decisions have addressed that section. (Though in footnote 35 the court cites to three recent Delaware ases, all summarized on this blog, that have addressed other sections of the UFTA.)
In addition to a thorough analysis of the UFTA, the court discussed the requirements for a constructive trust, which includes "identifiable proceeds".
My father's will states total equality in division of his assets between my sister and me.At age 89, he asked his eldest daughter, my sister to hold in trusts CD and IBM stocks. She agreed and was an honorable trustee. At his age, he never thought she'd die. She did. Her daughters claimed all his assets for themselves since their mother of course had my father's assets transferred to her name. What will happen in a lawsuit to reclaim his funds for his future use (wants surgery on his macular degeneration and for use as an inheritance for me and my children. My nieces refuse to return any of it, and consider it a windfall that they deserve.