Constructive Trusts
Constructive Trusts Overview
A constructive trust an a type of case that is used to establish ownership in an asset that is held by another. The most common situations where a constructive trust is appropriate is as follows:
- Oral Agreement. An oral agreement between people who are close enough where a written contract is likely not to be used. This agreement normally says the property of one person will be held by the other one in name only. The agreement itself can be implied.
- A breach of fiduciary duty. If someone is entrusted to hold property in their name as a fiduciary and takes advantage of that position, one remedy is to impose a constructive trust over the property. Note that putative damages may also be awarded when there is a breach of fiduciary duty.
- Fraud. When the property is acquired by fraud, the court can impose a constructive trust in the favor of the true owner.
- Unjust enrichment. When someone is unjustly enriched at the expense of another, a constructive trust may be imposed, even if there was no fraud or bad intent.
Constructive trusts are an equitable remedy designed to give relief when other remedies may not be available.
At the Law Office of J. Douglas Barics we have the experience at both the trial and appellate level to successfully represent you in any constructive trust case.
Do you need representation in a Constructive Trust Action on Long Island or New York City?
Contact us online or at (631) 864-2600.
Constructive Trusts in New York
What you need to know about Constructive Trusts
What is a Constructive Trust?
A constructive trust is a trust imposed by the court as an equitable remedy designed to prevent unjust enrichment. Unlike a normal trust, which is created to allow the trustee to hold property on behalf of the actual owner, a constructive trust is created to transfer the property back from the constructive trustee back to the actual owner.
Why is a Constructive Trust Needed?
A constructive trust is needed when someone has obtained title to property when he or she should not have, resulting in that person becoming unjustly enriched. When a court imposes a constructive trust, it can only return property to the rightful owner who was deprived of their interest. It cannot create a new property right.
How is a Constructive Trust Created?
A constructive trust is created by the court.
In order to have the court impose a constructive trust, the following elements must be proven.
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- A confidential or fiduciary relation between the parties
- A promise
- A transfer in reliance of that promise
- Unjust enrichment arising from not keeping the promise
What is a simple example of a Constructive Trust
You have $1,000. You give it to a trusted friend to by a piece of art and hold on your behalf, with the understanding that your friend will give the artwork to you. When you ask for your art, your friend says they are keeping it. The imposition of a constructive trust means that a court rules that your friend has been holding the money on your behalf, as all four elements are present. Your friend is a trusted friend, meeting the confidential or fiduciary relationship element. There was a promise to give you the art. You transferred the money to your friend in reliance on that promise, and your friend would be unjustly enriched if the promise is not honored.
Because constructive trusts are equitable in nature, the elements are not hard and fast, and each case will be determined on its own unique facts.
Constructive trusts are not easy to win. There are specific legal elements that must be established, and they are designed to cure a very specific set of circumstances.
But if these circumstances apply, a constructive trust can be an invaluable tool in protecting a true owner's rights.
Can a constructive trust be part of a divorce?
Constructive Trusts may be part of the pleadings in a divorce or annulment and listed as a separate cause of action. This approach is appropriate when the asset was acquired prior to the marriage or if the status of the marriage is in question as concurrent relief, since equitable distribution is still authorized in a void marriage. When there is no marriage between the parties but there is still a close relationship, a completely separate case for only the imposition of a constructive trust may be maintained.
Contact Our Constructive Trust Attorney Today
At the Law Office of J. Douglas Barics, we have the skills and knowledge to prosecute or defend any constructive trust action, no matter how challenging or complex. With over 20 years of experience in handling constructive trust cases, we can bring to you the services of a large firm at a fraction of the cost. When you need a skilled constructive trust lawyer located in Suffolk County, call The Law Office of J. Douglas Barics.
For a free phone case consultation or to schedule an office meeting, call 631-864-2600.
Constructive Trusts Overview
A constructive trust is an equitable remedy used to prevent someone in a trusted relationship from improperly benefitting themself or someone else, even if unintentional.
Proving Constructive Trusts
A constructive trust is a flexible remedy that normally involves (a) a confidential relationship, (b) a promise (c) a transfer based on that promise (d) unjust enrichment.
Defending Constructive Trusts
Defending constructive trust cases involves proving the elements of a constructive trust are not there or to prove other affirmative defenses which must be raised early on.
Motion Practice in Constructive Trusts
Motions are an integral part of constructive trust litigation. Common motions include pre-answer motions to dismiss, summary judgment and discovery motions.
Lis Pendens in Constructive Trusts
A lis pendens is especially important in a constructive trust case as the plaintiff often does not have title to the property. The lis pendens will prevent a defendant from selling their interest to defeat the lawsuit.
Appeals from Constructive Trusts
Appeals from constructive trust cases can occur while the case is ongoing or after the final judgment if the trial court makes an error in deciding something significant.
