Section 20.14 Constructive Fraud

• Library: Estate Administration 2014 Supp

2. (§20.14) Constructive Fraud

Constructive fraud involves a decedent and another standing in a fiduciary relationship who agree to transfer an asset to a third party. Instead, the fiduciary transfers the asset to a fourth party or retains it for the fiduciary, thus failing to perform the fiduciary duty to the original owner of the asset. In re Estate of Dawes, 891 S.W.2d 510, 524 (Mo. App. S.D. 1994); Estate of Hayward, 884 S.W.2d 10, 14–15 (Mo. App. W.D. 1994). The relief available when constructive fraud is proven is the imposition of a constructive trust. A constructive trust is neither express by its terms nor a trust in the conventional sense; rather, it is a remedy by which an asset is delivered to its intended owner.

Constructive trust actions invariably require extrinsic evidence of the decedent’s intentions in transferring an asset to another for the benefit of a third party. Dawes, 891 S.W.2d at 518. Constructive fraud and the resulting relief of imposing a constructive trust require proof “so clear, cogent, and convincing as to exclude every reasonable doubt in the mind of the trial court.” Fix v. Fix, 847 S.W.2d 762, 765 (Mo. banc 1993); Hayward, 884 S.W.2d at 15. Counsel should not treat these actions lightly. They not only carry an extremely high burden of proof but also often turn on the most discrete and subtle facts. A comparison of Dawes and Hayward provides...