EG maybe you have cancer and two days to live, could you go to the bank, withdrawal all your savings, regardless of anything you owe, and then just give them to your heirs now while still alive given you likely aren't going to have any need of it anymore, leaving nothing for the estate to be collected against?

2 Answers 2


This would still be a fraudulent transfer and the amounts transferred could be recovered in lawsuits against the persons receiving the funds.

  • 6
    @bdb484 "I sort of assumed that outside of bankruptcy or some other legal proceeding, we are generally free to spend our money as we see fit, even if we have debt." This is not true and contrary to Mark Johnson's observation, a specific intent to defraud is not required. If you make a transfer while insolvent or that renders you insolvent for less than substantially equivalent value, then you have made a fraudulent transfer (which is not always common law fraud). I've litigated and won the issue before in a case involving someone who gave away property to his parents before a murder-suicide.
    – ohwilleke
    Commented Mar 9 at 15:46
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    "If I have a credit card bill owing, am I not free to buy my daughter a gift?" If a gift to your daughter renders you insolvent, it is a voidable gift.
    – ohwilleke
    Commented Mar 9 at 15:48
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    @MichaelHall It is a widely adopted uniform law so its similar in almost every U.S. state. law.justia.com/codes/colorado/2022/title-38/article-8
    – ohwilleke
    Commented Mar 9 at 18:12
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    @MichaelHall The ballpark number would be attorneys fees, which are easily in the 4 digits if the other party instantly agrees after just receiving one letter, and start at 5 digits up the moment this actually enters court - and very quickly going 6 digits.
    – Trish
    Commented Mar 10 at 19:38
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    @MichaelHall " And if I can buy food, then why can't I buy a gift for my daughter?" This might be jurisdiction dependant, but in my jurisdiction the difference is in the exchange of consideration. With food, you get back something of equal value to what you paid (assuming it was an arms length transaction with a shop or restaurant). With a gift, you get nothing back. In bankruptcy proceedings, the gift transaction can be unwound but the food one cannot.
    – JBentley
    Commented Mar 11 at 11:47

You can do it, but the creditors can apply to court to unwind the transaction and recover the money from the heirs under the Insolvency Act 1986.

Section 339:

(1) Subject as follows in this section and sections 341 and 342, where an individual is made bankrupt and he has at a relevant time (defined in section 341) entered into a transaction with any person at an undervalue, the trustee of the bankrupt’s estate may apply to the court for an order under this section.

(2) The court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction.

(3) For the purposes of this section and sections 341 and 342, an individual enters into a transaction with a person at an undervalue if — (a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration, [...], or (c) he enters into a transaction with that person for a consideration the value of which, in money or money’s worth, is significantly less than the value, in money or money’s worth, of the consideration provided by the individual.

The "relevant time" of the transactions is defined at Section 341. There are two applicable time periods. Within 2 years prior to the bankruptcy application, any transaction can be unwound. Within 2-5 years prior, a transaction can be unwound but only if the now-bankrupt person was either insolvent at the time of the transaction or the transaction itself made them insolvent.

"Insolvent" means either that you are unable to pay your debts as they fall due (cash flow insolvency) or that the value of your assets is less than the value of your liabilities (balance sheet insolvency).

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