Legal Memorandum: Burden of Proving a Fraudulent Transfer

Issue: Who has the burden of establishing the statutory elements of an action brought under Minnesota’s Fraudulent Transfer Act?

Minnesota’s Fraudulent Transfer Act, which is nearly identical to the Uniform Fraudulent Transfer Act (UFTA), provides that (A) a transfer made by a debtor is fraudulent (B) as to a creditor whose claim arose before the transfer was made if (C) the transfer was made to an insider (D) for an antecedent debt, (E) the debtor/transferor was insolvent at that time, and (F) the insider had reasonable cause to believe the debtor/transferor was insolvent.  Minn. Stat. § 513.45(b) (2011).  This particular section of the Minnesota Act is identical with § 5 of the UFTA.  See id., Historical and Statutory Notes.  The creditor alleging a fraudulent transfer has the initial burden of proving the fraud alleged.  Pauling v. Pauling, 159 F.2d 531 (8^th Cir. 1947); see also Elliot & Callan, Inc. v. Crofton, 615 F. Supp. 2d 965 (D. Minn. 2009) (stating that the creditor has the burden of proving the elements of a fraudulent transfer under the Minnesota version of the UFTA). 

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