Implied Trusts

Today we’ll cover Implied Trusts, which are generally the result of litigation over misused assets or assets that have been absconded with.

An Implied Trust is a legal arrangement that has the characteristics of a trust without the formalities establishing one. An implied trust may not be expressly defined as a trust in a will or other legal document, and due to the very unique constructs and applications of an Implied Trust, Many debate whether an Implied Trust is, in fact, a trust at all.  Regardless of that fact, today we’re discussing them, and they are known as trusts.

In the situation of an Implied Trust, first, a court of law must find that a legally binding agreement does actually exist between two parties by examining the arrangement the parties have agreed upon.

Another way an Implied Trust is known is as a Constructive Trust.

Again, to understand a Implied Trust, we must first remember that an Implied Trust is not a trust, in the typical sense.  Typically a trust is an estate-planning tool into which the grantor has titled their assets, and an appointed trustee has duties of administration enduring for a substantial period of time.  A Implied Trust is not that; it is generally the result of litigation over misused assets or assets that have been absconded with. In a constructive trust the defendant breaches a duty owed to the plaintiff. The most common such breach is a breach of fiduciary duty.  A Implied Trust is a passive, temporary arrangement, in which the trustee’s sole duty is to transfer the title and possession to the beneficiary.

A Implied Trust is a temporary, equitable remedy that is imposed by a court to benefit a party that has been wrongfully deprived of its rights due to either a person obtaining or holding legal right to property that they should not possess.

How did the person “obtaining or holding legal right to property that they should not possess” come to possess the property in the first place?  There are a number of ways.  Some of the ways a person can obtain or hold legal right to property that they should not possess include property obtained by:

•            Breach of trust

•            Breach of duty (by executor) in dealing directly with the beneficiary

•            Coercion

•            Concealment

•            Duress

•            Fraud

•            Fraudulent misrepresentation

•            Gift (by Will, Trust, or Intestacy, based upon misrepresentation, fraud, concealment, a broken promise, disloyalty, or breach of trust)

•            Homicide

•            Ignorance

•            Inadvertence

•            Mistake

•            Theft

•            Undue influence

From a legal standpoint, an Implied Trust, must rule over specifically-named property; it can’t be hypothetical in nature, based upon speculative “property,” but, rather the specific property must be named.  An Implied Trust does not apply in cases of breach of contract where no actual ownership of property is involved.

Don’t attempt to execute this or any other complicated legal tools on your own; always seek first the guidance and expertise of a qualified estate planning lawyer.

 

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