An implied trust is one in which a judge determines that although there was no formal creation of a trust, the property owner demonstrated an intent for the property to be transferred to another person. It is a court-ordered trust that is usually issued as an equitable remedy to prevent the unjust enrichment of a defendant.
Normally, trusts are created when a settlor writes a document granting authority to a trustee to hold property that is to be transferred to a beneficiary. In contrast, an implied trust may not need a written document as the court will use the party’s actions as evidence that a trust was intended.
Therefore the main focus in implied trusts is the intent of the property owner. For example, if the property owner asked a friend to watch over their car while on vacation, it can be implied that the property owner never intended to make a gift of the car.
What are the Types of Implied Trusts?
In general there are two types of implied trusts:
- Constructive trusts: This is an equitable remedy issued by a judge that allows the property owner to recover property that might unjustly enrich a defendant. These are common in situations where the trustee is unlawfully holding the property, or where there are issues with the original trust such as undue influence or coercion
- Resulting trusts: These 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. Resulting trusts usually order the property to be returned back to the settlor
The common thread between all implied trusts is that a new trust is created by the court based on conclusions which are implied from the facts of the circumstances. When issuing an implied trust, the judge will try to create the implied trust according to the intentions of the property owner. This may be inferred either from the conduct of the parties or from any evidence gathered from written documents.
Are there any Defenses to Implied Trusts?
Yes, since implied trusts are usually employed as an equitable remedy, this means that principles of equity apply to implied trusts. Also, all equitable defenses are available to the defendant who will be affected by an implied trust. Most of these defenses focus on any wrongdoings committed by the plaintiff that would disqualify them from obtaining an implied trust.
For example, if the plaintiff has committed the same wrongdoing as the defendant, they would not be able to obtain an implied trust. This is known as the “clean hands defense”- that is, according to equitable principles, the plaintiff must themselves be innocent order to obtain the implied trust.
Another defense is that of laches. This is where the plaintiff has unnecessarily delayed in bringing the lawsuit. If the delay has resulted in prejudice or injury to the plaintiff, an implied trust remedy will not be available.
Do I need an Attorney for Implied Trust matters?
Implied trusts can be a very useful remedy for plaintiffs seeking to obtain equitable relief. Since implied trusts are issued in court, it is advisable that you work with an attorney if you are involved in such matters. Whether you are the party seeking an implied trust, or if an implied trust has been issued against you, you should contact an estate lawyer for advice and representation. The laws on implied trusts vary greatly from state to state. An experienced trusts attorney will be able to determine your legal rights in your particular state.