A constructive trust is not a traditional estate planning trust. It is a legal remedy imposed by a court to prevent unfairness.
In simple terms, a constructive trust is created when someone is holding property that, in fairness, belongs to someone else.
The court steps in and says:
“You may have legal title — but you cannot keep this property because it would be unjust.”
When Does a Constructive Trust Arise?
A constructive trust is typically imposed in situations involving:
- Fraud
- Undue influence
- Breach of fiduciary duty
- Theft or misappropriation
- Mistaken transfers
- Broken promises involving property
It is designed to prevent unjust enrichment.
Example of a Constructive Trust
Example 1: The Wrongful Transfer
A caregiver pressures an elderly person to transfer their home into the caregiver’s name.
After the elder passes away, the family challenges the transfer.
If the court finds that undue influence occurred, it may impose a constructive trust, requiring the caregiver to hold the home for the rightful heirs.
Example 2: Stolen Funds Used to Buy Property
If someone steals money and uses it to purchase real estate, a court can impose a constructive trust on the property.
Even though the thief holds legal title, the property is treated as belonging to the victim.
Example 3: Breach of Fiduciary Duty
Suppose a business partner secretly transfers partnership assets into their personal account.
A court may declare that those funds are held in constructive trust for the partnership.
How Is a Constructive Trust Different from a Regular Trust?
A traditional trust:
- Is intentionally created
- Has written trust documents
- Names trustees and beneficiaries
- Is used for estate or asset planning
A constructive trust:
- Is not planned in advance
- Is imposed by a judge
- Exists only to correct wrongdoing
- Is a legal remedy, not an estate planning tool
It is reactive, not proactive.
What Must Be Proven?
To obtain a constructive trust, a party typically must show:
- The defendant holds title to property.
- The property was obtained through wrongdoing or unfair conduct.
- It would be unjust for the defendant to retain the property.
Courts use constructive trusts to restore fairness.
Common Situations Where Constructive Trusts Appear
- Estate disputes
- Will contests
- Disputes involving joint bank accounts
- Business partner conflicts
- Divorce property disputes
- Fraud cases
They often arise in probate and fiduciary litigation.
Why Constructive Trusts Matter in Estate Disputes
Constructive trusts are frequently used when:
- A new will was signed under suspicious circumstances
- A joint account was added late in life
- A caregiver was added to a deed
- A power of attorney abused their authority
If assets were wrongfully diverted before death, a constructive trust may help recover them.
The Bottom Line
A constructive trust is a powerful court-ordered remedy used to prevent unjust enrichment and correct wrongdoing.
It is not something you create in advance — it is something a court imposes when fairness demands it.
If you believe property was wrongfully taken, transferred, or controlled, a constructive trust may be one of the legal remedies available.
Because these cases involve complex factual and legal issues, they require experienced legal guidance to evaluate and pursue properly.
