Ask most people what a “trust” is all about, legally-speaking, and they’ll probably describe some form of estate planning tool that goes along with a Last Will and Testament and/or a Life Insurance Policy. This answer isn’t wrong: lawyers draft trust documents all the time, where property is placed into “trust” for loved ones (”beneficiaries”). It’s a sound way to pass things down to children and grandchildren and it’s also often a wise tool to use with tax-planning.
However, that’s not the only way “trusts” are used here in Florida.
Florida takes a position that isn’t held by most states in the country. In Florida, we have something called a “constructive trust”, which is not really a trust at all. Instead, a Florida constructive trust is a form of remedy for someone who has been harmed by another’s wrongdoing – as recently explained in Swope v. Harmon (citations omitted):
In 2005, this court held that “[a] constructive trust . . . is not a traditional cause of action; it is more accurately defined as an equitable remedy.” …. Therefore, “[b]ecause a constructive trust is a remedy, it must be imposed based upon an established cause of action.” We continue to follow this rule … [and] conclude the trial court correctly dismissed the claim for a constructive trust because a constructive trust is a remedy, not a cause of action.
Constructive Trusts Imposed for Victims of Unjust Conduct
Sadly, all too often Florida probate lawyers – particularly Florida probate lawyers involved in probate litigation cases – see people who have been harmed by members of their own family or close loved ones. Family members who have stolen personal belongings and other valuable assets. It’s often an emotional situation where serious wrongdoing has taken place.
The lawyers involved in these cases often require the help of Florida courts to rectify this type of wrong. However, before a Court will help a probate lawyer the lawyer will need to follow several procedural steps including, pleading and proving that there was something illegal that was done to the victim, proving up the existence of valuable property and its history of ownership, and showing the present location of the property and its fair market value.
Undue Influence Example
For instance, in situations of undue influence related to a will contest, the beneficiary will need to prove that there was undue influence (see our posts on that cause of action here) and then be able to show which property is at issue (the property which has been transferred to a wrongdoer who is guilty of unduly influencing the decedent).
In this situation, the lawyer may ask the Florida judge to order that the property at issue be placed in a “constructive trust” – with the victim being the beneficiary of the judicially created constructive trust.
Constructive Trusts in Florida are Created by Operation of Law
Constructive trusts exist only by operation of law. No one can draft a “constructive trust” for a client in Florida. Constructive trusts are created in Florida courtrooms by Florida judges in order to take back title to property that is in the possession of a wrongdoer. The purpose of a constructive trust is to transfer title to property to the rightful owner. See, Abreu v. Amaro, 534 So.2d 771 (Fla. 3d DCA 1988).
A constructive trust is a remedial device with dual objectives — to restore property to the rightful owner and prevent unjust enrichment. To impose a constructive trust there must be (1) a promise express or implied, (2) transfer of the property and reliance thereon, (3) confidential relationship, and (4) unjust enrichment…. The person seeking to impose a constructive trust must prove those factors giving rise to a trust by clear and convincing evidence.
Note: there are other ways that constructive trusts can help people in Florida other than in probate controversies, such as divorce cases and business injury cases like tortious interference with a business relationship. More about constructive trusts in next month’s post.