Although insolvency is defined in the same way in both actual and constructive fraud cases, the effect of a finding of insolvency is very different in each case. It's important not to confuse the purpose of a finding of insolvency in a constructive fraud case with a finding of insolvency in an actual fraud case.
In a constructive fraud case, insolvency, coupled with a lack of adequate consideration in return for the transfer, automatically renders the transfer fraudulent, regardless of motive or intent. In contrast, in an actual fraud case, insolvency is only one of the factors weighed by the courts.
Because a finding of insolvency will control the outcome of a constructive fraud case, whenever there is an absence of adequate return consideration, the business owner who is, or anticipates becoming, insolvent, must ensure that transfers are either supported by adequate return consideration or that they do not qualify as "transfers" covered under the UFTA.