As discussed in a recent blog article, the New Hampshire Supreme Court In re the Estate of Couture determined that a constructive trust may be used to reach proceeds from an ERISA benefit after the beneficiary receives the payment. In rendering its decision, the Couture court also discussed the standard needed for the trial court to impose a constructive trust which will be discussed in this article.
In Couture, the New Hampshire Supreme Court opined that a constructive trust be imposed whenever it is necessary to correct a wrong or to satisfy a demand for justice. The New Hampshire Supreme Court stated there are no rigid requirements for imposing a constructive trust. Instead, the requesting party need only demonstrate that the relief is necessary. The Court went on further to state that a constructive trust is appropriate whenever it is necessary to provide restitution to prevent an unjust enrichment. The Couture court stated that the specific instances in which they would impose a constructive trust are numberless and the court may impose such constructive trust when it finds it unconscionable for the person to retain or enjoy the benefit received.
In cases where the divorce decree or agreement awards specific property to one party over the other but one or both party dies prior to the asset being transferred or prior to the change of a beneficiary designation; a constructive trust may be utilized to correct the injustice and to prevent the unjust enrichment that would result if the divorce agreement is not enforced. As stated in a recent blog article, the ERISA presumption does not apply in the imposition of a constructive trust against the person receiving the benefit, as opposed to suing the employer or the plan administrator regarding the payment of the benefit.
While a constructive trust may provide a remedy in instances where an error is made or a death takes place prior to the completion of the asset transfers, it is highly recommended that the divorced spouses diligently ensure that all assets are transferred and all beneficiary designations are changed consistent with the divorce decree to avoid the cost of receiving a constructive trust or to avoid the risk that the court may not impose such a constructive trust. Spending a little time and money after the divorce to carry out the terms of the divorce decree or agreement is well worth the expense as opposed to spending significantly more time and money trying to enforce the divorce agreement through the imposition of a constructive trust.
If you have any questions regarding imposing a constructive trust to carry out the terms of the divorce decree or agreement or what steps should be taken to enforce a divorce agreement prior to the death of the ex-spouses, please contact an attorney at Hamblett & Kerrigan.
Kevin P. Rauseo is a former director at Hamblett & Kerrigan P.A. and has since been appointed as a Justice for the New Hampshire Circuit Court. Please feel free to contact another attorney at Hamblett & Kerrigan to discuss your legal issues.