Implied trusts are a unique type of trust which are often best understood by understanding what an express trust is. In an express trust, an individual called a grantor gives real or personal property to a trustee. The trustee holds legal title to this property. The trustee manages the assets in the trust on behalf of one or more beneficiaries named in the trust. Beneficiaries have an equitable interest in the trust. This means that, at some point, they have the right to use and enjoy the trust assets.

Creating an express trust requires certain actions be taken. Generally, trust documents must be in writing, signed by the grantor. The trust documents must state what the assets are, and who is to receive them. The trust must name the specific beneficiaries and what they are to receive. For a trust to be valid, there must also be intent on the part of the grantor to create it.

Sometimes, the intent to transfer assets is present, but one of these other requirements has not been satisfied. In such circumstances, an express trust has not been created. In the interests of equity, or principles of fairness), a judge may find that an implied trust was created. An implied trust is a trust that the law deems to have been formed by implication. If a grantor, using words or conduct, intended to create a trust, a court may create an implied trust in favor of the beneficiaries.

What are the Kinds of Implied Trusts?

There are two types of implied trusts. These are constructive trusts and resulting trusts. In each of these, the trust is “passive,” meaning the trustee has no actual duties to perform. In a resulting trust, trust property is ordered returned to the grantor because the trust was incomplete for some reason. In a constructive trust, the beneficiaries hold legal and equitable title and can ask the court to have trust assets transferred to them.

What is a Resulting Trust?

A court will impose a resulting trust under certain conditions. A court will impose a resulting trust when an express trust (a trust in which the trustee holds and administers assets for the beneficiaries) fails for some reason. Reasons include failure to identify a beneficiary,and the grantor’s having incompletely disposed express trust assets. “Incompletely disposed” means the grantor did name a beneficiary for at least some of the trust asset.

Resulting trusts are issued primarily in cases where the beneficiaries have not been properly named in a trust document, or where the beneficiaries have become deceased before the property could be distributed. In a resulting trust, the court “erases” the failure, by ordering the property returned to the grantor.

What is a Constructive Trust?

A constructive trust is a trust imposed by a court as an equitable remedy, as a matter of fairness. The judge imposes the trust to ensure the person whom the grantor intended to receive trust property receives it. Trustees have no actual duties.Their only obligation is to transfer title and possession of assets to an intended beneficiary. The intended beneficiary is a person who would have received the assets, were it not for someone else’s wrongful conduct. Judges issue constructive trusts to ensure that wrongful conduct does not confer a benefit that might unjustly enrich someone, at the intended beneficiary’s expense.

Unjust enrichment results can occur when the trustee has stolen trust assets that belonged to a beneficiary. Unjust enrichment also occurs when a beneficiary, a trustee, or other person, has coerced the grantor into awarding that beneficiary assets the grantor intended to give to someone else. This coercion is referred to as “exerting undue influence.” If the judge finds there was sufficient evidence of wrongdoing, the judge can impose a constructive trust and order that the intended beneficiary be given trust assets.

Are There any Defenses to Implied Trusts?

Implied trusts are a form of equitable remedy. When a court orders an equitable remedy, it considers any evidence of wrongdoing on the part of both the defendant and the plaintiff. If, for example, a plaintiff has themselves committed wrongdoing, for example, by having exerted their own undue influence on the grantor, the court may order that the plaintiff recover nothing. The legal principle a court uses to reach this conclusion is called the “doctrine of unclean hands.” A person whose own hands are dirty should not recover something from someone with dirty hands, so to speak.

Equitable remedies also may apply when a would-be plaintiff takes too long to file a lawsuit. If a court finds a plaintiff has waited too long to bring a lawsuit, the court may deny the imposing of a constructive trust. This denial is based on the legal doctrine of “laches.” Laches occur when a plaintiff’s having taken too long to file suit unfairly prejudices a defendant. As a result, fairness concerns dictate that the plaintiff not be given the remedy of a constructive trust.

Do I Need the Help of a Lawyer With an Implied Trust Issue?

If you seek an implied trust, or, if an implied trust has been issued as a result of alleged wrongdoing on your part, you should contact an estate lawyer. An experienced estate attorney near you can advise you of your rights. The attorney can also advise you how to proceed, and can represent you in court proceedings.