What is Constructive Trust Claims

Property, wills and estates can be complicated matters during separations/divorces, and especially more so after an individual dies. However, death does not always necessarily end the individual’s obligations to others. It also does not remove the possibility of enforcing a claim against the estate of a deceased person.

There are often cases where the property may be held in the name of a deceased person, but another person has a right to that property due to his/her contributions to it. This situation would allow for a constructive trust claim by the latter party, and if granted, the remedy would act to redress an unjust enrichment.

In family law, constructive trusts are an equity remedy that exists to prevent unjust enrichment amongst spouses and common-law partners. Essentially, this remedy can be applied where one party was unjustly enriched at the expense of another, perhaps by having one spouse stay home to care for children rather than working; or where there was a joint family venture but one partner gained a greater share of profits.

These types of claims are compensatory in nature and often arise from the deceased’s acceptance of services or contributions that allowed for maintenance or the enhancement of an estate’s value.

A successful constructive trust claim could result in the court ordering the claimant the right to live in the matrimonial home or to divide up the property if, for instance, one partner contributed financially to the home by paying part of the mortgage, repairs and upkeep, taxes, etc. This can be enforced even after the property owner has passed.

This remedy can also be imposed where a party has been deprived of their rights due to their ex-spouse obtaining or holding a legal property right they should not possess due to oppressive conduct or a breach of fiduciary duty – in other words, where there was unjust enrichment by wrongdoing. For example, in cases where a will has been induced by fraud, duress or undue influence and this is revealed after probate has been granted, a constructive trust will be ordered to operate in favour of the testator’s estate.

Test for Unjust Enrichment and Constructive Trust Remedies

In order to make a claim of unjust enrichment, three factors must be proven:

1. One party received an enrichment;

2. The other party has been deprived or suffered a loss because of the enrichment (i.e. corresponding deprivation); and

3. There is an absence of a juristic reason for the enrichment – in other words, there is no legal reason for the enrichment.1

Once unjust enrichment has been established, the claimant may be entitled to either a constructive trust or a monetary award. The constructive trust would give the claimant an interest in the property or estate, either in whole or in part, through a court declaration.

In order to obtain a constructive trust proprietary remedy, the claimant spouse would then need to show that:

1. There is a sufficiently strong causal connection (i.e. a clear link) between their contributions and the acquisition, preservation, maintenance or improvement of the property/estate in question, and

2. That a monetary award would not be sufficient.2

If it is found that there is no sufficiently strong connection between the claimant’s contributions and the asset in question and that perhaps the estate has the means of providing a monetary award, it is likely that a constructive trust may not be granted.

Ultimately, as we are seeing more and more estate litigation regarding constructive trust claims, the constructive trust remedy remains available but is determined on a very case-by-case basis. Thus, given the constructive trust is an equitable remedy, our lawyers strive to work with clients to show that the facts support the claim that equity is in our client’s best interests.

Nothing in this article should be considered or relied on as legal advice or opinion. This article only provides general information and should you have any further questions regarding the wills, estates and constructive trust claims, please contact us to book a free initial consultation 905-366-0202 or through our website here.

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