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. A lawyer may bring a constructive trust action as part of or along with  a divorce proceeding. A close relationship between the parties is one element of a constructive trust, but there is no requirement they be married.

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?

In order to have the court impose a constructive trust, the following elements must be proven.

• 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

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.

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.

Call for a Free Phone Consultation or to Schedule a Low Cost Office Consultation

If you have have additional questions, contact our office to learn about your legal options for protecting your rights in any matter where a constructive trust may apply. To get your free phone consultation or to make an appointment, call (631) 864-2600. Serving clients in Suffolk, Nassau, Queens, Manhattan, Bronx, Westchester. Rockland, Orange and other surrounding counties are accepted on a case by case basis.