Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Thursday, July 18, 2013

Bank Fails to Prove Irreparable Harm, Court Denies Injunction

GavelMr. Pearl's company secured $17.5 million dollars in an unsecured loan from TD Bank, N.A. Mr. Peal was the guaranty on the loan. About a year later, Mr. Pearl began planning the distribution of his estate because he had lung cancer. He created a revocable trust naming his wife as the primary beneficiary. During this time he also restructured the loan with the bank. Shortly after Mr. Pearl's death, the Bank filed a claim against the Pearl estate to repay the loan. Additionally, the bank filed suit against the widow for any trust distributions and an injunction which attempted to keep her from disposing of any of her own assets. 

In TD Bank, N.A. v. Pearl, 891 F. Supp. 2d 103 (D.D.C., Sept 19, 2012), the court held the bank failed to prove that their claim would succeed on the merits nor could the bank prove irreperable harm which are requirements for an injunction. The bank alleged becuase Mr. Pearl funded his trust right before death and failed to leave money to pay his creditors his actions constituted a fraudulent transfer. The court disagreed stating that Mr. Pearl’s death “after suffering from lung cancer” could not be considered a “badge of fraud” under the statute.

See Kathy Sherby and Stephanie Moll, District of Columbia Court Finds No Fraudulent Transfer to Revocable Trust Under Uniform Fraudulent Transfer Act, Trust Bryan Cave, Jun. 25, 2013.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

http://lawprofessors.typepad.com/trusts_estates_prof/2013/07/bank-fails-to-prove-irreperable-harm-court-denies-injunction.html

Estate Planning - Generally, Trusts | Permalink

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