Which statement best describes a constructive trust?

Which statement best describes a constructive trust?

• A. Disposition if trust fails
• B. Restatement of property after divorce
• C. Formal trust perfected by writing
• D. Express trust with a named beneficiary

Answer: (A)

A constructive trust is an equitable remedy courts use to prevent unjust enrichment when someone holds property that belongs to another. It’s imposed by the court by operation of law, not created by a formal trust instrument or a written agreement. This kind of trust isn’t about restating property after a divorce, nor is it an express trust with a named beneficiary or a formal trust perfected by writing. Instead, it “labels” the holder of the property as a trustee for the rightful owner, and the remedy is to dispose of the property to the person who should rightfully own it. For example, if someone wrongfully acquires property and keeps it, the court can impose a constructive trust so the property is transferred to the true owner.

A constructive trust is an equitable remedy courts use to prevent unjust enrichment when someone holds property that belongs to another. It’s imposed by the court by operation of law, not created by a formal trust instrument or a written agreement. This kind of trust isn’t about restating property after a divorce, nor is it an express trust with a named beneficiary or a formal trust perfected by writing. Instead, it “labels” the holder of the property as a trustee for the rightful owner, and the remedy is to dispose of the property to the person who should rightfully own it. For example, if someone wrongfully acquires property and keeps it, the court can impose a constructive trust so the property is transferred to the true owner.