A constructivetrustis a legal concept created by the courts that describes the remedy that can be sought when a person holds the legal right to property that he should not be able to keep. This property is property that is illegally gained through fraud, wrongdoing, or some other kind of reprehensible behavior.
What do trustees need to know about constructive trusts?
? Constructive trusts arise in a wide variety of circumstances. ? There is no requirement for the legal owner to have acted in any way dishonestly or discreditably – it is not dishonest to be paid money by mistake. It may be unconscionable to keep the money after the mistake has been bought to the attention of the recipient.
What does constructive trust mean?
A constructive trust is an equitable remedy resembling a trust imposed by a court to benefit a party that has been wrongfully deprived of its rights due to either a person obtaining or holding legal right to property which they should not possess due to unjust enrichment or interference. How to pronounce constructive trust?
What is a court-ordered constructive trust?
A constructive trust isimposed by a court in order to benefit a party whose rights have been violated due to another person owning property that he should not possess. This illegal ownership may come about through fraud or another type of unconscionable behavior. The purpose of a constructive trust is to prevent unjust enrichment.
What is constructive trust in real estate litigation?
What is Constructive Trust in Real Estate Litigation? Constructive trust could be an effective tool when a real estate plaintiff wants to obtain title to a real property. Through constructive trust the court will compel the defendant to convey title to the plaintiff, the rightful owner.
What is the doctrine of undue influence?
The same doctrine applies where the plaintiff is induced to make the conveyance through the exertion of Undue Influence (conduct by a person that dominates and destroys the free will of another). If the conduct of the defendant goes beyond persuading the plaintiff to convey—if it encompasses violence, threats of violence or restraint, or other injury—there is an even stronger case for charging the transferee as a constructive trustee on the ground of duress.
Why is constructive trust not created?
A constructive trust does not arise because of the expressed intent of a settlor, one who establishes a trust. It is created by a court whenever title to property is held by a person who, in fairness, should not be permitted to retain it. It is frequently based on disloyalty or other breach of trust by an express trustee …
What happens if you get property through a will?
If a person obtains property through a will or intestacy by wrongfully and intentionally killing the owner, a constructive trust can be decreed as to the property obtained. The beneficiaries of the constructive trust imposed on the murderer are those persons who would have taken by intestacy or will or otherwise from the murdered person, as if the murderer had predeceased the victim.
What is constructive trust?
Constructive Trust. A relationship by which a person who has obtained title to property has an equitable duty to transfer it to another, to whom it rightfully belongs, on the basis that the acquisition or retention of it is wrongful and would unjustly enrich the person if he or she were allowed to retain it. A constructive trust does not arise …
What happens if a plaintiff transfers property to the wrong person?
If by Mistake of Factthe plaintiff conveys title to the wrong person, or the wrong property is conveyed to the intended person, or the plaintiff is otherwise induced to act by reason of mistake, the transfer can be set aside.
Why is it immaterial that the trustee acted innocently?
It is immaterial that the trustee acted innocently because of ignorance or in the belief that the conduct was not disloyal. It is unnecessary to prove that the acquisition of the property by dis-loyalty damaged the beneficiary, since it is sufficient to show the receipt by the trustee of property obtained by breach of his or her duty.
What is a relationship by which a person has obtained title to property?
A relationship by which a person who has obtained title to property has an equitable duty to transfer it to another, to whom it rightfully belongs, on the basis that the acquisition or retention of it is wrongful and would unjustly enrich the person if he or she were allowed to retain it.
What is a remedial constructive trust?
What is a remedial constructive trust (also called a constructive trust)? A constructive trust is created to remedy (or make up for) a situation where there is "unjust enrichment." If someone has possession of property (money, real estate, or other assets) that they should not have because they obtained it unfairly through fraud or breach of a fiduciary duty, this is unjust enrichment. The constructive trust is set up to solve the unfair situation that has happened.
Why does Ahmed sue Larry?
Ahmed understandably is upset and sues Larry for the money and the judge agrees with Ahmed. The used car can be placed in a constructive trust so that Larry is no longer its true owner. Once the trust is created, Larry is holding the car for Ahmed and must protect the property for him. The court could require Larry to turn …
How does resulting trust differ from constructive trust?
A resulting trust differs from a constructive trust because it is a trust that is set up based on a person’s intentions.
How are property interests and trusts linked?
Constructive trust and property interests are linked, because the trust is set up to change ownership of the property, to right the wrong that’s been done. A decision by a court that a constructive trust has been set up means that the person currently holding the property is no longer the legal owner and is holding it for the actual owner (the person who was done wrong by the actions). All benefits of the property belong to the real owner, even if it becomes more valuable than when it was wrongfully acquired.
What would happen if Karen stole money from Lee?
An example would be if Karen stole money from Lee and used it to buy a life insurance policy . The insurance policy can’t be transferred to Lee, but a constructive trust can be established that makes Lee the beneficiary of the policy.
What is the purpose of a constructive trust?
The purpose of a constructive trust is to prevent unjust enrichment. Unjust enrichment is a term used to describe a situation wherein one person profits at another person’s expense, without compensating that person for the value of his property. To put it simply, in a constructive trust the defendant has breached a duty he had owed to the plaintiff.
Why did Marcia tell Lionel she wanted him to move out?
When they separated, Marcia had told Lionel she was having an affair, and that she wanted him to move out. It was only logical, she said, because the house was in her name. Lionel consults with his attorney, however, and learns that all of the time he spent maintaining the home, and raising the family in the home, gave him certain rights to a portion of the home’s value.
What was the motion for summary judgment in the case of Albert and Doris?
The Appellants then filed a motion for partial summary judgment, arguing that they were entitled to a constructive trust on a portion of the assets that Albert had transferred to Doris. They also petitioned for an order requiring Doris to provide an income statement for all of the income generated since Albert’s death which was derived from the “gifted assets.”
What is fiduciary duty?
A fiduciary duty is the obligation of one party to act in the best interests of the other party. For instance, an attorney has a fiduciary duty to act in the best interests of his client. The breach of fiduciary duty comes when the attorney acts in a way that benefits his own interests, rather than the interests of his client.
What was the money judgment against Doris?
This included any income that would have been earned after Albert’s death, but wasn’t earned due to his “substantial gifts to others.”
What is a common intention constructive trust?
A common intention constructive trust arises in situations wherein there was an intention for one party to give the other party property, but the transfer failed for some reason. Now, because the transfer failed, the would-be beneficiary has suffered a loss due to his reliance on the transfer being properly executed.
Why is a constructive trust imposed?
A constructive trust is imposed by a court in order to benefit a party whose rights have been violated due to another person owning property that he should not possess. This illegal ownership may come about through fraud or another type of unconscionable behavior.
What is a constructive trust?
Constructive trust. A trust that arises by operation of law where it would be unconscionable for a person (A) who holds an asset to deny the beneficial interest of another person in the asset. A holds funds that he knows have been paid to him by mistake. A holds an asset that he has obtained by means of fraud.
What is a common intention constructive trust?
A holds funds that he knows have been paid to him by mistake. A holds an asset that he has obtained by means of fraud. A and another person (B) share a common intention that B should have a beneficial interest in an asset, and B has acted to his detriment on the basis of that intention. This is known as a common intention constructive trust …
What case dealt with co-ownership and severing a joint tenancy?
Co-ownership and severing a joint tenancy: Stack v Dowden and Jones v Kernott.
What is the case of Latham v Father Divine?
Perhaps most illustrative in the context of trusts and estates is the landmark case of Latham v Father Divine, 299 NY 22 (1949), where the facts seemed appropriate for a claim for tortious interference with wills, a cause of action that is not recognized by New York law (see Restatement (Second) of Torts §774B [1979-2010], citing Vogt v Witmeyer, 87 NY2d 998, 999 ).
What is constructive trust?
According to the Court of Appeals, the constructive trust is “the formula through which the conscience of equity finds expression. Where property has been acquired in such circumstances that the holder of legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee” …
Why was Latham’s will not executed?
However, due to fraud, undue influence, and ultimately murder committed by the defendant, the decedent was prevented from executing her new will.
Is constructive trust amorphous?
It is an amorphous doctrine, as the constructive trust is “not limited by rigid definition and its very purpose requires flexibility in its application” ( In re Alpert, 9 Misc 3d 1102 [A], *10). It therefore follows that the constructive trust “has been famously described as a remedy applicable to ‘whatever knavery human ingenuity can invent’” ( In re Alpert, 9 Misc 3d at *7 [Sur Ct, New York County 2005], quoting Bogert, Trusts and Trustees Sec. 471 at 29 [2d ed rev]). In fact, it is of such broad scope that attempted precise definitions have been deemed inadequate ( see Simonds v Simonds, 45 NY2d 233, 241 ).
Can wrongful act be found in a constructive trust?
Even applicable in the case of an innocent donee, no wrongful act is necessary to find unjust enrichment warranting the imposition of a constructive trust. However, in the case of a bona fide purchaser, he or she takes property free of a constructive trust that would otherwise be imposed (5 Scott, Trusts [3d ed] sec.468).
What is constructive trust?
In family law, constructive trusts are an equity remedy that exists to prevent unjust enrichment amongst spouses and common-law partners.
What happens if you have a constructive trust claim?
A successful constructive trust claim could result in the court ordering the claimant the right to live in the matrimonial home or to divide up the property if, for instance, one partner contributed financially to the home by paying part of the mortgage, repairs and upkeep, taxes, etc.
How to obtain constructive trust proprietary remedy?
In order to obtain a constructive trust proprietary remedy, the claimant spouse would then need to show that: 1. There is a sufficiently strong causal connection (i.e. a clear link) between their contributions and the acquisition, preservation, maintenance or improvement of the property/estate in question, and. 2.
What does "monetary award not sufficient" mean?
2. That a monetary award would not be sufficient.2. If it is found that there is no sufficiently strong connection between the claimant’s contributions and the asset in question and that perhaps the estate has the means of providing a monetary award, it is likely that a constructive trust may not be granted.
What is the meaning of "enrichment"?
1. One party received an enrichment; 2. The other party has been deprived or suffered a loss because of the enrichment (i.e. corresponding deprivation); and. 3. There is an absence of a juristic reason for the enrichment – in other words, there is no legal reason for the enrichment.1.
Can you get a constructive trust for unjust enrichment?
Once unjust enrichment has been established, the claimant may be entitled to either a constructive trust or a monetary award. The constructive trust would give the claimant an interest in the property or estate, either in whole or in part, through a court declaration.
Is constructive trust equitable?
Ultimately, as we are seeing more and more estate litigation regarding constructive trust claims, the constructive trust remedy remains available but is determined on a very case-by-case basis. Thus, given the constructive trust is an equitable remedy, our lawyers strive to work with clients to show that the facts support the claim that equity is in our client’s best interests.