Remedy for Fraudulent Transfers of Property

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.

© 2019 NextClient.com, Inc. All rights reserved.

• Trusts: Revocable & Irrevocable
  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.
• Use of Foreign Trusts to Protect Against Creditors
  In today’s litigious society more individuals are inquiring about asset protection planning, especially those individuals with a high risk of potential exposure to liability, such as business owners, doctors, or those involved in... Read more.
• General Rules Regarding Gift Taxes
  A gift tax is a tax on the privilege of making gifts to others while the taxpayer is still living. The gift tax supplements the estate tax, which taxes gifts made upon death. The gift tax was created to frustrate the attempts of those... Read more.
• Setting Up a Special Needs Trust for the Benefit of the Disabled
  Some government statistics estimate that between 15% and 20% of all Americans have some form of disability. It is also estimated that the majority of disabled persons will need to avail themselves of public assistance to help pay the... Read more.

• Estate planning for business owners: What happens to your business when you leave?
• Prevent uncertainties with estate planning
• Superstitious roadblocks to proper estate planning
• Money Matters: Reviewing your estate plan
• Remarried after having kids? Here are tips to avoid accidentally disinheriting them