Berman & Asbel, LLP

Understanding constructive trusts in Pennsylvania

Typically, a trust contains one or more assets that are overseen by a trustee for the benefit of one or more named parties. However, a constructive trust is used to transfer property from an individual who obtains the title to it illegally or through unscrupulous means back to its rightful owner. The trust is considered to be a passive vehicle that is created by a court to remedy the unlawful act.

In some cases, the constructive trust could be used in the event that the express trustee commits an act of disloyalty. In other words, a trustee makes a decision that allows that person or entity to obtain property it has no reasonable or legal right to. When a constructive trust is created, the defendant is compelled to transfer the title to a given property back to the plaintiff in the case.

A party that has been the victim of an illegal act that deprived him or her of property may choose to decline the constructive trust and opt to receive cash instead. However, it is not possible to receive both cash and the property through a constructive trust. Furthermore, it must involve specific property and is not used as a remedy to a breach of contract where there was no ownership of property involved.

Those who are interested in creating a comprehensive estate plan may want to look into trusts. They can be customized to fit the needs of the person creating them and can be further refined as life events and other circumstances warrant. As a trust is held outside of an estate, it may be possible for those assets to avoid probate, which may make it easier to settle an estate.

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