(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.
(b) If any qualified disposition is avoided pursuant to subsection (a) of this section, the following rules apply:
(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:
(A) The trustee has 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;
(B) 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
(C) For purposes of this subdivision, 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 has the burden of proving by clear and convincing evidence that a trustee or beneficiary acted in bad faith as set forth in subsection (b) of this section, except, in the case of a beneficiary who is also the transferor, the burden on the creditor is to prove by a preponderance of the evidence that the transferor-beneficiary acted in bad faith. The provisions of this subsection shall be construed to provide substantive nonprocedural rights under state law.
(d) For purposes of sections 45a-487j to 45a-487r, inclusive, attachment, garnishment, sequestration or other legal or equitable processes shall be permitted only in circumstances permitted by the express terms of said sections.
(e) For purposes of this section, “court” means the Superior Court.
(P.A. 19-137, S. 107.)
History: P.A. 19-137 effective January 1, 2020.