A constructive trust is a type of trust that may be imposed by a court to return title to property to the rightful owner of such property when the property has been wrongfully taken or obtained through methods such as
undue influence, duress, elder abuse, fraud or misuse of a confidential relationship. Unlike an estate planning trust that is created by a settlor or trustor, a constructive trust arises by operation of law. A constructive trust may be equitable relief granted to a party that brings legal action over property, such as estate or trust property.
A court may impose a constructive trust on property to prevent someone benefiting from fraud, misrepresentation, theft, etc. This type of trust may be applied to property to prevent unjust enrichment. When a constructive trust is imposed, the party that does not have the right to hold the property has a duty to transfer title to the party that should hold title. Specific requirements for constructive trusts are set forth in state law. For information on state trust laws, see Trust Law.
Constructive Trusts and Litigation
A constructive trust may be imposed on property as a result of a lawsuit over an estate or trust. For example, this type of claim may be made by a beneficiary of a trust. Reference: www.pennyborn.com. When a claim for relief is filed, the complaint or petition may include a request for a constructive trust over property that is the subject of the lawsuit. This can include real estate, personal property, bank accounts, brokerage accounts, life insurance, and other types of assets. A plaintiff or petitioner bringing legal action over an estate or trust may also sometimes request damages, a declaratory judgment or other types of relief, depending on the facts of the case and applicable laws.When heirs and beneficiaries go to court over their right to trust or estate property, their legal action may request a constructive trust be imposed on such property if it is held by another party that may be unjustly enriched by retaining it. A constructive trust may be imposed on property that was gifted. A constructive trust may be granted in other types of litigation as well when there is a dispute over assets requested to be returned or transferred to the rightful owner. See Will and Trust Disputes.
Constructive Trusts and Inheritance Theft
When an heir or beneficiary learns that estate or trust property was taken by someone that did not have a legal right to such property, such as through
inheritance theft, the heir or beneficiary may bring legal action to recover such property in some circumstances. If a court determines legal title to estate or trust property should be transferred to a party other than the current holder or owner, the court may impose a constructive trust to return the property to the party that should have received it. For example, if an heir or beneficiary has been the victim of inheritance theft, interference with inheritance, fraud or breach of fiduciary duty resulting in a loss of property, a court may place a constructive trust on assets in a decedent's estate or property held in a trust and require the wrongful holder to transfer it so the interest of the heir or beneficiary may be restored. However, the court may determine that a constructive trust is not the appropriate remedy and award damages or some other type of relief. A court may also order that misappropriated property be traced and recovered.If you believe you have a case of inheritance theft, fraud, undue influence, duress or any other type of claim, consult a lawyer. Only a licensed attorney can advise you on whether you have a claim and the remedies that are available. Finding an attorney.
Breach of Fiduciary Duty by Trustees
When a beneficiary brings an action against a trustee claiming breach of fiduciary duty or some other duty of the trustee, the beneficiary's attorney may ask the court to impose a constructive trust. Many state statutes contain provisions allowing a constructive trust or lien to be imposed on trust property if there has been a breach of trust by the trustee, such as a breach of fiduciary duty owed by a trustee. When there is litigation against a trustee, the beneficiary sometimes requests a
Trust Accounting as well, depending on the circumstances.
Remedies in Estate and Trust Litigation
In order for a constructive trust to be granted as relief in estate or trust litigation, typically there must be property that can be identified to be the subject of the trust. If you believe you have the right to inherit such property, should have received it as a gift or are the rightful owner of such property and it is currently held by someone that obtained the property through unlawful or unconscionable means, ask a lawyer about the requirements to assert your claim under applicable
state laws. In any claim in which you may be requesting a constructive trust as an equitable remedy, it is important to act quickly for several reasons.This article provides an educational overview of constructive trusts in estate and trust litigation. If you have questions about constructive trusts or any other type of trust, consult a licensed attorney.COPYRIGHT 2020 Pennyborn.com. ALL RIGHTS RESERVED. Published by Pennyborn.com on September 9, 2019. Updated on September 18, 2019.
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