Estate Planning Newsletter

Fraudulently Transferred Property & Constructive Trusts

A constructive trust is a remedy imposed by a court when a person has wrongfully attained property in an inappropriate way. The court will undo the transaction and order that title to the property go to the rightful owner.

Types of Wrongful Conduct

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

• Fraud (including forgery)
• Theft (including embezzlement)
• Accident
• Mistake
• Undue influence
• Violation of fiduciary duty (for example, where a partner purchases property in his own name rather than in the name of the partnership)

Factors

In order for a constructive trust to be created, the following factors must exist:

• Fraudulent representations or concealment of important and material information, or breach of trust
• Acts such as transfer of property as a result of the fraud or breach
• Profit and/or unjust enrichment as a result of fraudulent representation or concealment of important and material information

Remedy Under Constructive Trusts

A constructive trust is imposed when an affected party initiates a lawsuit requesting relief. It typically provides that the property pass from the wrongful owner to the rightful owner.

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

© 2025 NextClient.com, Inc. All rights reserved.

• Custodial Accounts Held for Minors
  Minors have no legal capacity to manage property. Thus, transferring property and other assets to minors can be problematic. For example, parents or other adults may wish to convey a small amount of property to a minor without investing... Read more.
• The Reciprocal Trust Doctrine Can Trap the Unwary
  Estate planning attorneys utilize a number of different estate planning techniques to accomplish the goals of their clients and sometimes to minimize transfer taxes. One common estate planning technique is the transfer of assets into an... Read more.
• Federal Estate Tax Requirements for "Special Use" Valuation
  Calculation of the Value of Estate Assets Estate taxes are calculated based upon the value of the assets in the estate. One duty of the executor or administrator is to inventory all estate assets and assign a... Read more.
• The Delaware Series LLC: Advantages and Pitfalls
  Limited Liability Companies (“LLCs”) are a form of business ownership which is a separate legal entity much like a corporation. An LLC is treated like a partnership for tax purposes and like a corporation for liability... Read more.

• Offset Sued Over Alleged Assault on Security Guard at Los Angeles Cannabis Dispensary
• Guests Injured in Navy Pier S’mores Fire Sue Chicago Restaurant Operator
• Federal Judges Order Trump Administration to Resume SNAP Funding During Shutdown
• Virginia Teacher Testifies in $40 Million Negligence Trial After 6-Year-Old Shot Her in Class
• Drake Files Appeal to Revive Defamation Suit Against UMG Over Kendrick Lamar’s “Not Like Us”