FRAUDULENT CONVEYANCES Nassau Academy of Law CLE Live ...

770 N.Y.S.2d 421 Page 32 A.D.3d 780, 770 N.Y.S.2d 421, 2003 N.Y. Slip Op. 19961(Cite as: 2 A.D.3d 780, 770 N.Y.S.2d 421)fair consideration at a time when the person makingthe conveyance "intends or believes that he [or she]will incur debts beyond his [or her] ability to pay asthey mature, is fraudulent as to both present and futurecreditors." Pursuant to this constructive fraudprovision, a conveyance made by a person who has a"good indication of oncoming insolvency" is deemedto be fraudulent (Matter of Shelly v. Doe, 249 A.D.2d756, 758, 671 N.Y.S.2d 803). Here, however, takinginto account the rates charged by the facility at thetime the transfers were made, it cannot be said thatMrs. Witt had a "good indication" that the funds sheretained would be insufficient to pay for her nursinghome care during the three-year period she would berequired to wait in order to become eligible for Medicaidassistance (Matter of Shelly v Doe, supra; seeCase v. Fargnoli, 182 Misc.2d 996, 1001, 702N.Y.S.2d 764; see also Matter of John XX., 226A.D.2d 79, 652 N.Y.S.2d 329).2 A.D.3d 780, 770 N.Y.S.2d 421, 2003 N.Y. SlipOp. 19961END OF DOCUMENT[3] *782 Finally, we find no basis to set aside thetransfers pursuant to Debtor and Creditor Law § 276,which provides that "[e]very conveyance made * * *with actual intent * * * to hinder, delay, or defraudeither present or future creditors" is fraudulent. Whilecreditors may rely upon circumstantial factorsdeemed "badges of fraud" to establish an inference offraudulent intent (White Rose Food v. Mustafa, 251A.D.2d 653, 654, 674 N.Y.S.2d 438; see Matter ofShelly v. Doe, supra; Pen Pak Corp. v. LaSalle Natl.Bank of Chicago, 240 A.D.2d 384, 658 N.Y.S.2d407), here the evidence submitted in support of themotion demonstrated that Mrs. Witt retained assetsreasonably calculated to cover the cost of her care forthe three-year period she would be required to waituntil she became eligible for Medicaid benefits. Althoughthe plaintiff contends that this conduct wasfraudulent, at the time the transfers were made, nopenalty could be imposed upon an individual fortransferring assets more than three years before**424 his or her application for Medicaid (see Matterof John XX., supra ). Under these circumstances,Mrs. Witt's decision to make gifts to her family whileretaining assets reasonably calculated to cover thecost of her care until she became eligible to receiveMedicaid assistance cannot be considered acts ofintentional fraud against future creditors (see Matterof John XX., supra; see also Matter of Shah, 257A.D.2d 275, 283, 694 N.Y.S.2d 82, affd. 95 N.Y.2d148, 711 N.Y.S.2d 824, 733 N.E.2d 1093).© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.