What Is a Constructive Trust?

Video Transcript

"A term that you might here out there, in the world, talking to friends, is something called a constructive trust. And one of the things I want you to be careful about in this whole area of the law, is there are a lot of terms that sound almost alike; constructive trust, living trust. There's even something called constitutional trust for goodness sakes. There are living wills, there are living trusts. What the heck is the difference? Well we're going to cover that in these series of videos that we're doing. But, a constructive trust is really unlike any other trust that's out there. You're not going to set up a constructive trust, a judge is going to set up a constructive trust. A constructive trust typically comes about where somebody has acquired money from somebody they shouldn't have. They acquired money in a fraud. They acquired money from a theft. Let's say for example: someone kills their spouse. And they're the beneficiary of their spouse's will. They're the beneficiary of their spouse's trust. They're the beneficiary on the life insurance. That's a pretty good thing. So they're dead. I've go all the money. What's wrong with that? Well the problem is, is that the law says, sorry Charlie, you shouldn't have the money. It's not money you've got legally, it's money you've got illegally, and the court will impose a constructive trust on that person. The court will say you don't get the money. You now hold the money in a trust for the children of the deceased. For the family members of the deceased. For somebody other than the person who committed that crime. So a constructive trust is the law stepping in saying hold on, we know you have the money, we know it's in your name, but we're not going to let you keep that money because you got it wrongfully, and you're going to have to pay that money over to somebody who is justly entitled to it."