Is a constructive trust a trust for purposes of the CRS ?
A conÂstrucÂtive trust accordÂing to Wikipedia is an equiÂtable remÂedy resemÂbling a trust (implied trust) imposed by a court to benÂeÂfit a party that has been wrongÂfully deprived of its rights due to either a perÂson obtainÂing or holdÂing legal right to propÂerty which they should not posÂsess due to unjust enrichÂment or interference.(That was a mouthÂful). More simÂply: Is a conÂstrucÂtive trust a trust as this term is used in the comÂmon reportÂing stanÂdard ? Does the litÂtle attribute “conÂstrucÂtive” make a big difference ?
The word conÂstrucÂtive might misÂlead the unwary; the conÂstrucÂtion takÂing place here is that of lawyers who chip off blocks of the trust to make it fit a rather atypÂiÂcal set of cirÂcumÂstances. Many know this type of legal conÂstrucÂtion from employÂment law where a conÂstrucÂtive disÂmissal is the interÂpreÂtaÂtion that an employee who quits his job actuÂally has been fired.How come to such a conÂcluÂsion: the boss treated the employee badly so that the employee did not have a choice but leave.
That Wikipedia (which proÂvided the introÂducÂtory senÂtence) is not far off in regards to the interÂpreÂtaÂtion of the law can be seen by recent deciÂsions of US courts which define a conÂstrucÂtive trust as “a relaÂtionÂship, with respect to propÂerty, subÂjectÂing the perÂson who holds title to the propÂerty to an equiÂtable duty to conÂvey it to another on the ground that his or her acquiÂsiÂtion or retenÂtion of the propÂerty would conÂstiÂtute unjust enrichÂment”. Other jurisÂdicÂtions will treat fact patÂterns as those described by the Nebraska court by applyÂing conÂcepts of unjust enrichÂment. Even though mulÂtiÂple natÂural perÂsons might be involved in such a transÂacÂtion, with potenÂtially fiduÂciary duties runÂning among them, the label “conÂstrucÂtive“ indiÂcates semanÂtic lawyerly wranÂgling that leave the origÂiÂnal word and its meanÂing in the dust. The view that conÂstrucÂtive trusts are not trusts is supÂported by legÂisÂlaÂtures as e.g. the CalÂiÂforÂnia ProÂbate Code , which specifÂiÂcally excludes conÂstrucÂtive trusts from the defÂiÂnÂiÂtion of a trust (see secÂtion 82). (See also MATTER OF HSBC BANK USA, NA, 96 AD 3d 1655 — NY: AppelÂlate Div., 4th Dept. 2012).
The litÂtle lawyerly conÂstrucÂtion seems to indiÂcate that conÂstrucÂtive trusts are not trusts for purÂposes of the comÂmon reportÂing stanÂdard. The alterÂnaÂtive would be rather ridicuÂlous, since any claim for unjust enrichÂment needed to be reported under CRS.
 Is a constructive trust a trust for purposes of the CRS ? was originally published on Common Reporting Standard