In trust law, a constructive trust is an equitable remedy imposed by a court to benefit a party that has been wrongfully deprived of its rights due to either a person obtaining or holding a legal property right which they should not possess due to unjust enrichment or interference, or due to a breach of fiduciary duty, which is intercausative with unjust enrichment and/or property interference. It is a type of implied trust (i.e., it is created by conduct, not explicitly by a settlor).

In the United States (in contrast to England), a constructive trust remedy generally does not recognize or create any continuing fiduciary relationship — that is, a constructive trust is not actually a trust except in name. Rather, it is a fiction declaring that the plaintiff has equitable title to the property at issue, and ordering the defendant to transfer legal ownership and possession to the plaintiff. For instance, in some states the slayer rule is implemented in the form of a constructive trust.

Constructive trusts are imposed by operation of law. They are also referred to as implied trusts. They are not subject to formality requirements. Unlike a resulting trust, which also arises by operation of law, a constructive trust does not give effect to the imputed/presumed intention of the parties.

Instead, constructive trusts are largely said to be triggered by unconscionability. This is the idea that a defendant would be unjustly enriched if they were allowed to keep property for themselves. The main issue with this argument is that we would have to have a really broad approach to unjust enrichment in order for a constructive trust to come under that underpinning concept in order for us to understand constructive trust. This statement is incoherent and without any basis in law or fact.

In a constructive trust the defendant breaches a duty owed to the plaintiff. The most common such breach is a breach of fiduciary duty, such as when an agent wrongfully obtains or holds property owned by a principal. A controversial example is the case of Attorney General for Hong Kong v Reid, in which a senior prosecutor took bribes not to prosecute certain offenders. With the bribe money, he purchased property in New Zealand. His employer, the Attorney-General, sought a declaration that the property was held on constructive trust for it, on the basis of breach of fiduciary duty. The Privy Council awarded a constructive trust. The case is different from Regal (Hastings) Ltd v Gulliver, because there was no interference with a profit-making opportunity that properly belonged to the prosecutor.

Being a Privy Council decision, Reid did not overrule the previous decision of the Court of Appeal of England and Wales in Lister v Stubbs which held the opposite, partially because a trust is a very strong remedy that gives proprietary rights to the claimant not enjoyed by the defendant's other creditors. In the event of the defendant's insolvency, the trust assets are untouchable by the general creditors. Supporters of Lister suggested that there was no good reason to put the victim of wrongdoing ahead of other creditors of the estate. There was a tension in English law between Lister and Reid which was highlighted in Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd. The United Kingdom Supreme Court subsequently overruled Sinclair in FHR European Ventures LLP v Cedar Capital Partners LLC, holding that Lister was no longer good law.

In Foskett v McKeown a trustee used trust money together with some of his own money to purchase a life insurance policy. Then he committed suicide. The insurance company paid out to his family. The defrauded beneficiaries of the trust sought a declaration that the proceeds were held on constructive trust for them. The House of Lords said that the beneficiaries could choose between either: (a) a constructive trust over the proceeds for the proportion of the life insurance payout purchased with their money; or (b) an equitable lien over the fund for the repayment of that amount.

There is controversy as to what the true basis is of this trust. The House of Lords said that it was to vindicate the plaintiffs' original proprietary rights. However, this reasoning has been criticized as tautologous by some scholars who suggest the better basis is unjust enrichment (see below). This is because there must be a reason why a new property right is created (i.e. the trust) and that must be because otherwise the family would be unjustly enriched by receiving the proceeds of the insurance policy purchased with the beneficiaries' money. "Interference with the plaintiff's property" can justify why the plaintiff can get its property back from a thief, but it cannot explain why new rights are generated in property for which the plaintiff's original property is swapped.