Constructive trusts are an equitable remedy designed to prevent unjust enrichment. Consider the following example.
You have $1,000. You give it to a trusted friend to hold on your behalf, and its understood that your friend will give it back to you. When you ask for your money back, 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.
A constructive trust cannot create a new right. Its purpose is to protect the actual owner's rights by saying someone else is holding a valuable asset on their behalf.
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.
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
Constructive Trusts may be a separate cause of action in a divorce or annulment proceeding, or the may be a completely separate case altogether.