A constructive trust has nothing to do with estate planning. A constructive trust is an involuntary equitable trust created by operation of law as a remedy to compel the transfer of property from the person wrongfully holding it to the rightful owner.
California Civil Code section 2223 provides that "[o]ne who wrongfully detains a thing is an involuntary trustee thereof, for the benefit of the owner."
Civil Code section 2224 states that "[o]ne who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he or she has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it."
Under these statutes and the case law applying them, a constructive trust may only be imposed where the following three conditions are satisfied:
(1) the existence of a res (property or some interest in property);
(2) the right of a complaining party to that res; and
(3) some wrongful acquisition or detention of the res by another party who is not entitled to it.
(Burlesci v. Petersen, (1998) 68 Cal.App.4th 1062, 1069.)
Constructive trust is a remedy, not a cause of action. (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 398.)
Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.
I agree with the previous answer and will just add that a constructive trust is the law's remedy for the loss of property as a result of fraud or self-dealing. It is imposed by a court in order to prevent the unjust enrichment of one party at expense of another. It typically results from the breach of a fiduciary relationship, where the fiduciary fraudulently induces the other party to transfer the property to the fiduciary.
This answer is in response to a general legal question and is intended for informational purposes only. It does not constitute legal advice. Use of this website and its e-mail link does not create an attorney-client relationship with Attorney Mekdsy. Messages with confidential information should not be sent to Attorney Mekdsy via the e-mail link. The information provided in this answer must not be used as a substitute for consulting with an attorney. Brian Mekdsy is licensed to practice law in the Commonwealth of Massachusetts only.
A constructive trust is a legal remedy. It is not a kind trust that is created by a settlor. The court imposes a constructive trust on the assets of a liable person who is in possession of trust assets that have been wrongfully taken, such as financial elder abuse or undue influence.
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