A constructive trust is not an actual trust by the traditional definition but a trust created through a court’s power, over assets they determine a party cannot equitably keep. It is a legal fiction that is used as a remedy for unjust enrichment. Hence, there is no trustee, but the constructive trust orders the person who would otherwise be unjustly enriched to transfer the property to the intended party.
No formula exists to determine when conduct justifies the creation of a constructive trust; although common themes include stolen property, property obtained through fraudulent means, or property mistakenly delivered to the wrong party. Additionally, a constructive trust will not be created if another adequate remedy exists in law.
[Last updated in July of 2022 by the Wex Definitions Team]
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