Rhode Island General Laws 18-9.2-6. Effect of avoidance of qualified dispositions
(a) A qualified disposition shall be avoided only to the extent necessary to satisfy the transferor‘s debt to the creditor at whose instance the disposition had been avoided, together with any costs, including attorney’s fees, that the court may allow.
Terms Used In Rhode Island General Laws 18-9.2-6
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Creditor: means , with respect to a transferor, a person who has claim. See Rhode Island General Laws 18-9.2-2
- Debt: means liability on a claim. See Rhode Island General Laws 18-9.2-2
- Disposition: means a transfer, conveyance or assignment of property (including a change in the legal ownership of property occurring upon the substitution of one trustee for another or the addition of one or more new trustees), or the exercise of a power so as to cause a transfer of property, to a trustee or trustees, but shall not include the release or relinquishment of an interest that theretofore was the subject of a qualified disposition. See Rhode Island General Laws 18-9.2-2
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Garnishment: Generally, garnishment is a court proceeding in which a creditor asks a court to order a third party who owes money to the debtor or otherwise holds assets belonging to the debtor to turn over to the creditor any of the debtor
- Lien: A claim against real or personal property in satisfaction of a debt.
- Property: includes real property, personal property, and interests in real or personal property. See Rhode Island General Laws 18-9.2-2
- Qualified disposition: means a disposition by or from a transferor to a trustee, with or without consideration, by means of a trust instrument. See Rhode Island General Laws 18-9.2-2
- Transferor: means a natural person who, or entity which, as an owner of property or as a holder of a general power of appointment, which authorizes the holder to appoint in favor of the holder, the holder's creditors, the holder's estate or the creditors of the holder's estate, or as a trustee, directly or indirectly, makes a disposition or causes a disposition to be made. See Rhode Island General Laws 18-9.2-2
- Trustee: A person or institution holding and administering property in trust.
(b) In the event any qualified disposition is avoided as provided in subsection (a) of this section, then:
(1) If the court is satisfied that the trustee has not acted in bad faith in accepting or administering the property that is the subject of the qualified disposition:
(i) Such trustee shall have a first and paramount lien against the property that is the subject of the qualified disposition in an amount equal to the entire cost, including attorney’s fees, properly incurred by the trustee in the defense of the action or proceedings to avoid the qualified disposition;
(ii) The qualified disposition shall be avoided subject to the proper fees, costs, preexisting rights, claims and interest of the trustee (and of any predecessor trustee that has not acted in bad faith); and
(iii) For purposes of subdivision (1) of this subsection, it shall be presumed that the trustee did not act in bad faith merely by accepting the property;
(2) If the court is satisfied that a beneficiary of a trust has not acted in bad faith, the avoidance of the qualified disposition shall be subject to the right of the beneficiary to retain any distribution made upon the exercise of a trust power or discretion vested in the trustee of the trust, which power or discretion was properly exercised prior to the creditor’s commencement of an action to avoid the qualified disposition. For purposes of this subdivision, it shall be presumed that the beneficiary, including a beneficiary who is also a transferor of the trust, did not act in bad faith merely by creating the trust or by accepting a distribution made in accordance with the terms of the trust.
(c) A creditor shall have the burden of proving that a trustee or beneficiary acted in bad faith as required under subsection (b) of this section by clear and convincing evidence except that, in the case of a beneficiary who is also the transferor, the burden on the creditor shall be to prove that the transferor-beneficiary acted in bad faith by a preponderance of the evidence. The preceding sentence provides substantive nonprocedural rights under Rhode Island law.
(d) For purposes of this chapter, attachment, garnishment, sequestration, or other legal or equitable process shall be permitted only in those circumstances permitted by the express terms of this chapter.
History of Section.
P.L. 1999, ch. 402, § 1; P.L. 2007, ch. 302, § 1; P.L. 2007, ch. 478, § 1.