What is a “constructive trust”?

Normally, when we think of a trust, we think of one specifically and deliberately set up: a trust fund for one’s children, for example.  This is an “express trust”.

A “constructive trust“, however, is one which is a court declares exists or imposes onto parties despite the fact that there wasn’t a specific intention to create a trust on the part of the settlor (the one creating the trust).    The court says, in essence, “X holds the assets, but (s)he does so subject to the rights of Y to a given value of those assets”.

An example of such a constructive trust would be in cases of unjust enrichment.   Another would be in estate cases where the survivor or a marriage breaches an agreement with their now-deceased spouse to distribute their assets in an agreed-upon way (such as an equal split between their two families).



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