Maxine Aaronson, Attorney at Law
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Estate Planning Newsletter

  • Resulting Trusts
    There may be instances where property under a trust is transferred to the wrong beneficiary. This transfer can be corrected through a remedy called a resulting trust or an implied trust. Do not confuse a resulting trust, which is... Read more.
  • Revocable & Irrevocable Trusts
    Unlike a will or some other types of trusts, which take effect upon the death of their creator, a “living trust” or “inter vivos trust” comes into effect during its creator’s lifetime. The creator of a... Read more.
  • Totten Trusts for Assets Payable on Death
    A decedent’s assets may be transferred upon their death to their heirs or other beneficiaries through probate. “Probate” is the legal process by which a court determines who receives a decedent’s assets under... Read more.
  • Adding Flexibility to Your Estate Plan
    What is a Power of Appointment? A power of appointment is the power given by one person to another (referred to as the “holder” of the power of appointment) to designate who is to receive an asset.... Read more.
Estate Planning News Links

Constructive Trusts: Fraudulent Transfer of Property

A constructive trust is a remedy imposed by the court when a person has wrongfully attained property. The court basically takes the property away from the wrongful owner and puts it in trust for the rightful owner. In the estate planning/administration context, a constructive trust is usually imposed when there is wrongful conduct on the part of the trustee or beneficiary.

Types of Wrongful Conduct

Any wrongful activity that leads to the unfair acquisition of property may be cause for a constructive trust, including:

  • Fraud
  • Accident
  • Mistake
  • Undue influence
  • Violation of trust or fiduciary duty (for example, when a trustee purchases property in his own name rather than in the name of the beneficiary)
  • Homicide (for example, to obtain life insurance benefits)

Remedy Under Constructive Trusts

A constructive trust is imposed by a court as a result of a complaint by an affected party (typically a trustor or beneficiary of a trust). It may provide that the property pass from the wrongful owner to the rightful owner, or it may provide for the property to be held by a trustee for the rightful beneficiary.

However, if the unlawful owner has damaged or destroyed any of the trust property, the rightful owner is entitled to a money judgment for the value of the property.