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Estate Planning Newsletter

  • Wills that Must be Witnessed
    A witnessed will is only one of several different types of wills. It is also referred to as a “formal” or “attested” will, and involves the eyewitness participation of other... Read more.
  • Life Insurance Policies and Marital Settlement Agreements
    Many marital settlement agreements require one party to maintain a life insurance policy on his or her life naming the former spouse as the primary beneficiary. While this provides some financial security for the former spouse, it may... Read more.
  • 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.
  • Application of a Gift Tax
    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.
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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.

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